Monthly Disciplinary Actions - October 2008

Member Firm Disciplined for Trading Violations
RBC Capital Markets Corp.
Hearing Board Decision: 08-043
08 Oct 2008
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Case Note
Violated  NYSE Rule 411(b)(1) by entering for execution proprietary odd-lot orders that aggregate 100 shares or more without having those orders consolidated into round lots as far as possible; violated NYSE Rule 476(a)(10) by filing inaccurate Daily Program Trade Reports; violated NYSE Rule 476(a)(11) by failing to file certain Daily Program Trade information within required time frames; violated NYSE Rule 342 (a) and (b) by failing to provide for, establish and maintain appropriate procedures of supervision and control, including a system of follow-up and review reasonably designed to achieve compliance with NYSE rules and policies pertaining to odd-lot orders and submission of Daily Program Trade Reports. Consent to censure and $125,000 fine.
Case Summary
RBC Capital Markets Corp. of New York, New York, a member firm, consented without admitting or denying guilt to findings of trading violations. 
  • An NYSE hearing officer found that on numerous occasions from October 13, 2004, through May 20, 2005, RBC Capital Markets Corp (“the Firm”), prior to the opening of trading, improperly entered on the NYSE through SuperDOT at least 44,000 proprietary odd-lot market orders that should have been aggregated, as far as possible, into round lots.
  • In addition, from October 1, 2004, through May 13, 2005, the Firm failed to report to the NYSE numerous trades that should have been reported on Daily Program Trade Reports and untimely submitted numerous other trades. The Firm also failed to reasonably supervise and implement a separate system of follow-up and review with respect to its odd-lot trading activities and its submission of DPTRs. 

The NYSE imposed a penalty of a censure and $125,000 fine. RBC consented to the penalty.
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NYSE ARCA OPTIONS DISCIPLINARY ACTION
NYSE Arca Options Trading Permit Holder Disciplined for Financial and Operational Deficiencies
Casey Securities, LLC
Hearing Board Decision: 08-AO-02
08 Oct 2008
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Case Note
Violated Section 17(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 17a-4(f) thereunder, and NYSE Arca Options Rule 11.16, by failing to preserve e-mails, instant messages, trial balances, balance sheets, income statements, and monthly net capital computations in a non-rewritable, non-erasable format. Violated Section 17(a) of the Exchange Act, and Rule 17a-4(b)(4) thereunder, and NYSE Arca Options Rule 11.16, by failing to retain and review business-related facsimile and certain e-mail communications. Violated NYSE Arca Options Rule 9.18 by transacting business with the public in options contracts when it was not approved by or registered with NYSE Arca to do so. Violated NYSE Arca Options Rule 11.3 by failing to establish, maintain or enforce written policies and procedures reasonably designed to prevent the misuse of material, non-public information by persons associated with it by failing to: a) obtain and review certain outside brokerage account statements for associated persons; and b) require all associated persons to timely acknowledge receipt of its policies to prevent the misuse of material nonpublic information. Violated NYSE Arca Options Rule 11.19 by failing to: a) conduct an independent review of the Firm’s AML Compliance Program; and b) obtain the written approval of the Firm’s senior management of its AML Compliance Program. Violated NYSE Arca Options Rule 11.11 by failing to disclose to NYSE Arca six financial arrangements over $5,000 each with other persons or entities. Violated NYSE Arca Options Rule 2.23 by allowing its registered employees to be engaged in outside business activities without first receiving the Firm’s written approval. Violated NYSE Arca Options Rule 11.18 by failing to establish, maintain, and/or enforce appropriate written policies and procedures for supervision and control, including separate system of follow-up and review by failing to: a) ensure that electronic and facsimile communications and financial reports were properly retained and reviewed; b) ensure that the Firm did not transact business with the public in options contracts when it was not approved by or registered with NYSE Arca to do so; c) obtain and review outside brokerage statements of its associated persons and require all associated persons to timely acknowledge receipt of its policies to prevent the misuse of material nonpublic information; d) ensure that the Firm conducted an independent review of its AML Compliance Program and have senior management evidence its approval of the Firm’s AML Compliance Program; and e) implement written policies and procedures requiring its registered employees to disclose its outside business activities to the Firm and to obtain the Firm’s pre-approval for such activities. Casey Securities, LLC is hereby censured by NYSE Arca Inc. and fined $40,000.
Case Summary
Casey Securities, LLC of San Francisco, California,  an NYSE Arca Options Trading Permit Holder, consented without admitting or denying guilt to findings of financial and operational deficiencies.

  • This matter primarily involves violations by the Firm pertaining to books and records deficiencies in 2006 and 2007. The violative activity included, among other matters, that the Firm failed to timely report certain financial arrangements, failed to preserve electronic communications and financial records in the required format, and failed to conduct an independent review of its Anti-Money Laundering Compliance Program. In addition, the Firm failed to implement policies and procedures to prevent the misuse of material nonpublic information and failed to document in writing its prior approval of its employees’ outside business activities. Finally, the Firm had inadequate written procedures for supervision and control, including a separate system of follow-up and review, in the above-referenced areas.

NYSE Arca imposed a penalty of a censure and $40,000 fine. Casey Securities, LLC consented to the penalty.
View Text of Disciplinary Decision (pdf)
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