FINRA, Exchange Consortium Fines Credit Suisse Securities $6.5m

Financial Industry Regulatory Authority (FINRA), together with Cboe Global Markets, NASDAQ, the NYSE, and their affiliated exchanges, have levied a $6.5 million fine on Credit Suisse Securities, per a FINRA filing.

The fine details violations of Supervision and Market Access Rules over a period of four years, including 2010 to 2014.

During this period, Credit Suisse had offered its both broker-dealers and other institutional entities direct market access to numerous exchanges.

Over four years, Credit Suisse had executed over 300 billion shares on behalf of its direct market access clients.

Unfortunately, this activity managed to generate over 50,000 alerts at FINRA and the Exchanges for potential manipulative trading over this period.

The alerts centered on the potential for Spoofing Spoofing Spoofing deals with information or network security, which is defined as a situation in which an entity or program successfully falsifies data to gain an illegitimate advantage.This falls into the category of scammers and hacking. Spoofing is the act of disguising an email or other internet communication, making the receiver think that it is coming from one source when it is from another. Spoofing, in many cases, allow fraudsters into your computer or network by deceit. This can apply to emails Spoofing deals with information or network security, which is defined as a situation in which an entity or program successfully falsifies data to gain an illegitimate advantage.This falls into the category of scammers and hacking. Spoofing is the act of disguising an email or other internet communication, making the receiver think that it is coming from one source when it is from another. Spoofing, in many cases, allow fraudsters into your computer or network by deceit. This can apply to emails Read this Term, layering, wash sales, and pre-arranged trading. More specifically, three clients drew specific focus, accounting for the vast majority of these alerts.

“As gatekeepers to the U.S. markets, it is critical that firms implement a robust supervisory system and actively surveil for manipulative activity in order to protect the integrity of the markets. This case demonstrates that firms who do not reasonably do so will be held accountable,” according to a statement by FINRA and the exchanges.

Asleep at the wheel?

These three clients accounted for approximately 20 percent of the firm’s overall order flow. Despite the large frequency of alerts, FINRA and the Exchanges found that Credit Suisse failed to properly establish an adequate supervisory system.

Credit Suisse took no measures to undertake written supervisory procedures, reasonably designed to monitor for any of the potential abuses outlined above.

Consequently, orders for billions of shares entered US markets without being subjected to post-trade supervisory reviews.

In parallel, Credit Suisse was also put on notice of gaps in its surveillance system.

For its part, Credit Suisse neither admitted nor denied the charges. The group has consented to findings levied against it as well as the $6.5 million fine.