ACS Execution Services enters into settlement with FINRA over reporting violations
During a period of nearly two years, the firm reported 343.5 million order events to OATS, nearly all of which contained inaccurate, incomplete or improperly formatted data.
New Jersey-based provider of execution services to broker-dealers ACS Execution Services, LLC has entered into a settlement with the United States Financial Industry Regulatory Authority (FINRA). The settlement concerns rule violations which occurred between March 9, 2016, and February 9, 2018 (the “Review Period”).
FINRA notes that each required record of the time of an event entered into the Order Audit Trail System (OATS) must be expressed in terms of hours, minutes, and seconds. The time of an event must be expressed in hours, minutes, seconds, and milliseconds if the member’s system captures time in milliseconds. During the Review Period, ACS’s system for capturing order event times captured milliseconds data.
During the Review Period, the firm submitted approximately 343,503,736 New Order Reports (“NWs”) to OATS, which accounted for about 37% of the firm’s total reporting obligation. But the firm reported all 343,503,736 NWs to OATS with “000” as the milliseconds data, rather than the actual milliseconds captured by the firm’s system. As a result, nearly all of its NWs reports to OATS during the Review Period were inaccurate.
By virtue of the foregoing, ACS violated FINRA Rules 7450(a) and 2010.
Further, during the Review Period, the firm failed to establish and maintain a system to supervise the activities of each associated person, as well as WSPs (written supervisory procedures), reasonably designed to achieve compliance with applicable FINRA rules regarding the accuracy of order event timestamps reported to OATS. The firm’s WSPs provided for reviews based on certain automated daily feedback on the OATS website including, but not limited to, Unmatched Exchange Route Reports and Unmatched Inter-Firm Route Reports.
In addition, the firm’s supervision of its OATS reporting accuracy included a review of its monthly OATS Report Cards. OATS automated daily feedback and monthly Report Cards, however, do not provide feedback for milliseconds reporting (among other fields). Thus, the firm violated FINRA Rules 3110(a), 3110(b), and 2010.
As a part of the settlement with FINRA, ACS Execution Services agrees to a censure and a fine of $75,000 (comprising a $55,000 fine for violating FINRA Rules 7450(a) and 2010 and a $20,000 fine for the supervision violations).