Investment Management Law: CCO Fined and Suspended for Firm’s Quote-Stuffing

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Investment Management Law: CCO Fined and Suspended for Firm’s Quote-Stuffing

CCO Fined and Suspended for Firm’s Quote-Stuffing

FINRA fined and suspended the Chief Compliance Officer, 9 traders, and the Director of Trading of a broker-dealer charged with “quote-stuffing.” FINRA alleges the traders utilized a high frequency trading strategy that involved entering non-bona fide orders to induce other market participants into a stock to create buying or selling pressure. FINRA cited 46,000 occasions in which the firm obtained advantageous prices, resulting in $575,000 in profits.

OUR TAKE: It is unclear why FINRA acted against the CCO, other than to allege supervisory failures. However, FINRA has included CCOs in recent actions alleging general failures to supervise.

http://www.finra.org/Newsroom/NewsReleases/2010/P121951

Posted by Todd Cipperman at 9/15/2010 5:45 AM

Categories: Distribution and Broker-Dealers
Tags: quote-stuffing high volume trading cco liability

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