The Financial Industry Regulatory Authority (FINRA) has fined market-making and Execution services provider Citadel Securities $275,000 for lapses in regulatory reporting. The self-regulatory body additionally issued a censure order against the company.
The official order issued on Thursday detailed that Citadel Securities had multiple issues while reporting Treasury transactions with the Trade Reporting and Compliance Engine (TRACE) from July 2017 through October 2019.
FINRA Is Becoming Strict with Reporting Violations
The alleged specific violations of the company include ‘incorrectly reporting internal transfers as Treasury transactions, when they were not reportable’, ‘failing to append the "No Remuneration" indicator to TRACE reports for certain Treasury transactions between Affiliates ’, and ‘failing to include the correct contra-party type in its TRACE reports for certain affiliate transactions’.
With these reporting lapses, the market maker allegedly violated FINRA Rules 6730 and 2010. Additionally, Citadel Securities violated FINRA Rules 3110(a) and (b) and 2010 as its supervisory system was not reasonably designed to achieve compliance with TRACE reporting rules because it could only detect violations that would generate automatic alerts.
Though Citadel Securities agreed to pay the penalty, it neither admitted nor denied the allegations.
“Respondent hereby accepts and consents, without admitting or denying the findings and solely for the purposes of this proceeding and any other proceeding brought by or on behalf of FINRA, or to which FINRA is a party, prior to a hearing and without an adjudication of any issue of law or fact,” the acceptance letter added.
Meanwhile, FINRA was actively penalizing financial companies for reporting violations, some settlements even reaching millions of dollars. Most recently, it fined independent broker-dealer LPL Financials $6.5 million for failure in keeping records.
