NASD fines 18 firms for auditing violations
05 October 2004 | 4226 views | 0
New York investment firm SG Cowen is one of 18 companies that has been censured and fined by the US National Association of Securities Dealers (NASD) for violating order auditing regulations.
Mary Schapiro, vice chairman, NASD, says the enforcement actions are against a wide range of firms for violations such as missing reports, inaccurate data and failure to correct data after it had been rejected.
The largest single action was against SG Cowen, which was fined $800,000 for failing to report OATS data for approximately 50 million orders received by its equity derivatives desk between October 1999 and March 2004.
Although SG Cowen had introduced systems for capturing and reporting OATS data in 1999, operational changes that were implemented shortly afterwards meant that data generated for the equity derivatives desk were never forwarded to NASD - even though other trading desks at the firm were regularly submitting reports.
The lack of an adequate supervisory system meant that SG Cowen did not discover the problem until late 2003. The fine imposed on the company consists of $500,000 for inadequate supervision and $300,000 for OATS violations.
The other firms that were fined for non-compliance with OATS regulations were Spear, Leeds & Kellogg, Schwab Capital Markets, Credit Suisse First Boston, Carlin Equities Corporation, FutureTrade Securities, Pulse Trading, Scottrade, Delta Asset Management Company, Deutsche Bank Securities, Doyle, Miles & Co, Quantlab Securities, BNY Brokerage, Index Securities, Mid-Atlantic Capital Corporation, Options Trading Associates, Transcend Capital and UBS Securities,
In concluding the settlements, the firms neither admitted nor denied the charges.
NASD says compliance with the OATS rules is critical to its regulation of the Nasdaq Stock Market. Companies are required to report certain information related to the handling and execution of customer orders and certain proprietary orders for Nasdaq securities.