A FINRA member firm has agreed to pay a $275,000 fine and accept a censure following findings that it inaccurately reported more than 166,000 transactions to the Trade Reporting and Compliance Engine (TRACE) over six years. The enforcement action underscores the regulator’s continued focus on the accuracy of trade reporting and the effectiveness of supervisory systems designed to ensure compliance.
According to FINRA, the violations stemmed from two major issues:
- Inaccurate Trade Reporting:
From July 2017 to August 2023, the firm submitted over 166,000 inaccurate transaction reports to TRACE, in violation of FINRA Rules 6730 and 2010. These errors went undetected and uncorrected for an extended period, undermining market transparency. - Supervisory System Failures:
From July 2017 to January 2025, the firm failed to establish and enforce a supervisory system and written supervisory procedures (WSPs) reasonably designed to ensure TRACE compliance, in violation of FINRA Rules 3110 and 2010.
In resolving the matter, the firm neither admitted nor denied the findings, but consented to the entry of FINRA’s conclusions.
What Firms Can Do Differently
This case illustrates how long-standing reporting errors paired with weak supervision can carry significant regulatory consequences. To prevent similar issues, compliance teams should consider:
- Conducting regular reconciliations between internal systems and TRACE reports.
- Reviewing and updating WSPs to ensure they’re actionable and up to date.
- Implementing supervisory controls to monitor and test trade reporting accuracy.
- Delivering targeted training to reinforce TRACE reporting responsibilities.
By proactively strengthening supervisory frameworks and validating reporting accuracy, firms can reduce regulatory exposure and help ensure ongoing compliance with FINRA expectations.
