FINRA fined TD Ameritrade Clearing, Inc. and SG Americas Securities, LLC for failure to report large options positions and related failure to supervise. According to FINRA, the two firms failed to report a combined 3.4 million positions.
According to the TD Ameritrade action, the brokerage firm failed to aggregate certain large options positions as acting in concert over a three-year period, which contributed to a failure to report 1.4 million positions as required.
FINRA also found the firm failed to implement adequate supervisory systems to address reporting compliance. The Authority concluded that these failures impacted nearly 4,100 accounts.
For these violations, FINRA censured and fined TD Ameritrade $1,150,000.
Meanwhile, FINRA found that SG Americas specifically failed to report end-of-day conventional options positions in 450,000 instances over three years, conventional options positions 50,000 times over one month, counterparties for conventional options positions in 518,955 instances over seven months, customers' conventional options positions 100,212 over one month and an additional nine counterparties for conventional options positions over the course of a separate two-week period.
On the whole, SG Americas self-reported that it had incorrectly netted the long and short legs of put/call spread transactions involving conventional index options resulting in approximately 919,325 failures.
FINRA found that over between December 2007 and January 2013, SG Americas failed to establish or maintain an adequate supervisory system to address the issue of reporting and its associated compliance.
For these violations, FINRA censured the firm and fined it $675,000.
SG Americas was previously censured and fined $15,000 by the NASDAQ Options Market for another failure to report violation which occurred on 41 occasions between 2008 and 2009.
In issuing its decisions, FINRA stated, "It is essential that regulators receive accurate, timely and complete information about large options positions, particularly those positions that involve accounts trading in concert, because this information is necessary to conduct market surveillance and to protect the integrity of the marketplace."
If you have invested with TD Ameritrade Clearing, SG Americas Securities or with any other firm whose failure to supervise has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.