The Financial Industry Regulatory Authority (FINRA) has placed a $100,000 monetary sanction on Justly Markets (previously DBOT ATS), a firm that formerly operated as an alternative trading system (ATS), for failing to preserve the memoranda of over 95 million orders it received from its broker-dealer customers between April 2017 and October 2019. The US self-regulatory organization (SRO) censured the platform, noting that the firm's actions violated certain sections of its rules and those of the US Securities Exchange Act of 1934.
FINRA disclosed these in a published Letter of Acceptance, Waiver and Consent (AWC) filed by Justly Markets and was accepted by the regulator earlier on Tuesday. According to the private American regulatory body, DBOT between April 2017 and February 2020, failed to establish a supervisory system, including written supervisory procedures, reasonably designed to comply with its recordkeeping requirements.
However, the US watchdog noted that Justly Markets has accepted to pay the monetary sanction without admitting or denying the violations.
FINRA Explains DBOT Case, Fine
In the filing, FINRA explained that DBOT, between May 1, 2018, and October 31, 2019, deployed the services of a third-party vendor to preserve its order memoranda. However, when the firm engaged the services of a different vendor in October 2019, the original vendor deleted the firm’s order memoranda.
“The firm had not otherwise preserved the records,” FINRA said, adding that “therefore, Respondent (Justly Markets) violated Section 17(a) of the Exchange Act, Exchange Act Rule 17a-4(b)(1), and FINRA Rules 4511 and 2010.”
On the supervisory failure, FINRA said, “the firm had no policies or procedures, and did not conduct any supervisory reviews, to ensure that the firm made and kept current (or reviewed the accuracy of), preserved order memoranda.”
Justly Markets/DBOT Operations in the US
Justly Markets became a member of FINRA in November 2012 and operated as DBOT ATS, LLC, from November 2016 until September 2021. The firm started operating as an ATS in April 2017, automatically matching buying and selling orders in over-the-counter securities received from broker-dealer customers.
However, the firm ceased its ATS operation in the US in February 2020 and started operating as a private placement platform, Justly Markets, subsequently, selling securities to accredited investors and institutional clients.
FINRA Slaps Wells Fargo and Instinet with Fines
Meanwhile, FINRA recently slapped Wells Fargo Securities with a $200,000 fine for overstating its advertised trade volume on Bloomberg and Thomson Reuters between December 2016 and June 2018. The SRO earlier this month also slammed a $165,000 fine on Instinet Incorporated, an institutional agency-model broker, for publishing 54 inaccurate monthly reports on its order executions and for having a poor supervisory system.
