Broker-Dealer to pay $2.75 million penalty
The U.S. financial regulator Securities and Exchange Commission (SEC) announced that Convergex Execution Solutions LLC, now known as Cowen Execution Services LLC, will pay $2.75 million to settle charges that the broker-dealer firm provided the SEC with incomplete and deficient securities trading information known as “blue sheet data.”
According to the SEC’s order, for nearly four years as a result of coding errors, a substantial number of the firm’s “blue sheet” submissions were missing data or contained deficiencies, including customer identifying information, order execution times, exchange codes, transaction type identifiers, and other trade information.
The order found that from May 1, 2012 to Feb. 28, 2016, approximately 29 percent of Convergex’s submissions contained deficient customer identifying information. Although the Financial Industry Regulatory Authority (FINRA) sanctioned Convergex in March 2012 for deficient blue sheet submissions, the order found that the firm did not take reasonable steps to ensure that its blue sheet submissions to the SEC contained complete and accurate information and failed to identify the deficiencies during this period.
“Broker-dealers must ensure they submit complete and accurate blue sheet data to the SEC because the failure to do so can hinder our ability to detect wrongdoing and protect investors,” said Joseph G. Sansone, Chief of the SEC’s Market Abuse Unit.
The SEC’s order finds that Convergex willfully violated the broker-dealer books and records and reporting provisions. Convergex admitted the findings in the SEC’s cease-and-desist order and agreed to be censured and pay a $2.75 million penalty.
The SEC’s investigation was conducted by David S. Brown and supervised by Mr. Sansone and Diana K. Tani of the Market Abuse Unit. The SEC appreciates the assistance of FINRA.