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Broker-Dealers Settle FINRA Reporting Allegations

Friday, November 8, 2013

Nov. 6 --TD Ameritrade Clearing Inc. has agreed to pay $1.15 million to settle allegations by the Financial Industry Regulatory Authority that it failed to report or to accurately report certain large trader positions (In re TD Ameritrade Clearing Inc., FINRA, No. 20100214842-01, 10/24/13).

In a second Nov. 6 announcement, FINRA said that SG Americas Securities LLC has agreed to pay $675,000 to settle similar allegations. Both broker-dealers also allegedly had related supervisory deficiencies (In re SG Americas Securities LLC, FINRA, 20100216014-01, 10/21/13).

The TD Ameritrade settlement became final Oct. 24, and the SG America's settlement became final Oct. 21.

According to the self-regulatory organization, TD Ameritrade failed between May 2007 and January 2010 to properly aggregate certain reportable positions as “acting-in-concert.” The SRO said the alleged conduct impacted nearly 4,100 accounts and resulted in the firm failing to report approximately 1.4 million positions.

In addition, TD Ameritrade allegedly failed to establish and maintain “reasonable supervisory procedures and supervisory systems” to ensure compliance with rules pertaining to the accurate reporting of options positions.

Meanwhile, FINRA separately alleged that from December 2007 to January 2013, SG Americas failed to report over-the-counter options positions in approximately 500,000 instances; failed to report the counterparty for OTC options positions or incorrectly reported its customers' OTC options positions in more than 600,000 instances; and failed to report or misreported OTC index options positions in more than 900,000 instances.

The firm also allegedly failed to establish and maintain reasonable supervisory procedures and supervisory systems to ensure compliance with applicable rules.

Both entities consented to the settlements without admitting or denying the allegations.

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