FINRA fines Moloney Securities for failures related to “marking the close” activities

Maria Nikolova

The firm did not have a system or written procedures reasonably designed to supervise for possible indicators of marking the close activity.

Moloney Securities, Co., Inc. has agreed to pay a fine of $100,000 as a part of a settlement with the United States Financial Industry Regulatory Authority (FINRA).

From January 2013 through April 2015 (the “Relevant Period”), Moloney failed to establish and maintain a supervisory system reasonably designed to:

  1. achieve compliance with FINRA’s suitability rule with respect to qualitative suitability and concentration in high-risk products; and

  2. achieve compliance with applicable NASD and FINRA Rules pertaining to the detection and prevention of a form of manipulative trading known as marking-the-close.

“Marking the close” is the execution of transactions in a security at or near the end of the trading day in order to affect the security’s closing price. If successful, the marking activity may make the value of the security appear to be higher or lower than it otherwise was during the trading day, which could allow the manipulator to benefit from the artificially affected price. Marking the close is a violation of Section 10(b) of the Securities Exchange Act of 1934 (“SEA”) and SEA Rule 10b-5 and FINRA Rules 2020 and 2010.

During the Relevant Period, Moloneey failed to establish and maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules, prohibiting marking the close.

Specifically, Moloney did not conduct any surveillance or conduct supervisory reviews for possible indicators of marking the close activity. The firm also failed to establish, maintain, and enforce written supervisory procedures to monitor for potential marking the close activity.

The firm was found not have had a system or written procedures reasonably designed to supervise for possible signs of marking the close activity.

Finally, Moloney has failed to reasonably investigate two of its representatives who frequently executed purchase or sale orders of common stock of Company X, a thinly-traded security, at or near the close of the market during 2013.

By virtue of the foregoing, Moloney violated NASD Rule 3010 and FINRA Rules 3110 and 2010.

Read this next

Metaverse Gaming NFT

Despite crypto winter, Fastex grabs $23.2 million in Fasttoken token sale

Fasttoken, part of the Fastex web3 ecosystem, has secured $23.2 million in financing through the private and public token sales of its native cryptocurrency Fasttoken (FTN).

Digital Assets

Iran to repay Russian debts in gold-backed stablecoins

A high-ranking member of the Russian parliament confirmed reports that his country was in talks with Iran to create a stablecoin for foreign trade settlements, to replace the dollar, ruble and Iranian rial.

Digital Assets

SEC denies Cathie Wood’s bitcoin ETF for second time

The approval of a regulated crypto derivative is still looking far less likely, as the US regulators have once again denied Cathie Wood’s application for a long-awaited spot bitcoin exchange-traded fund (ETF).

Executive Moves

Pavel Spirin promoted to Scope Markets CEO following Rostro acquisition

Belize-based FX and CFDs brokerage Scope Markets has promoted Pavel Spirin to take on an expanded role as the company’s chief executive officer. He replaces the outgoing CEO Jacob Plattner, who has also been a major shareholder since he resigned his position as managing director at GKFX.

Retail FX

Public.com goes all-in on alternative investing, launches Rare Sneaker Portfolio

“The concept of curated Portfolios means that our members will be able to invest in categories like art, trading cards, royalties, and real estate without needing to become subject matter experts on individual assets.”

Industry News

State Street taps AWS and Microsoft for cloud and infrastructure solutions

“By standardizing and simplifying our technology operating model, we will be able to more quickly deploy client environments and launch new products and services, while continuing to enhance the resiliency of our technology environment and our business operations.”

Institutional FX

Bitpanda launches Investment-as-a-Service business for banks, fintechs, online platforms

“Financial institutions today have to ask themselves how they aim to cater the increasing demand for modern investing solutions. Building these Individually, means a high startup cost, and products that are often outdated before they are even launched.”

Institutional FX

Options expands market data feeds after partnership with Tools for Brokers

“Our integration with ACTIV Financial marked the beginning of a new era in market data availability and infrastructure. Our teams have come together to provide unparalleled, fully managed market data services alongside Options’ global connectivity and infrastructure.”

Industry News

Recruitment in financial services sector buoyant despite planned mass layoffs

“It remains to be seen what impact this will have on hiring levels within the financial services arena this quarter”, said APSCo, regarding the expected mass layoffs within the financial services sector in England & Wales. 

<