FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Announces 2015 Examination Priorities
The Securities and Exchange Commission today announced its Office of Compliance Inspections and Examinations’ (OCIE) priorities for 2015 which focus on three areas: protecting retail investors, especially those saving for or in retirement; assessing market-wide risks; and using data analytics to identify signs of potential illegal activity.
“Our examination program collects information for the Commission on a range of important trends, issues, and risks,” said SEC Chair Mary Jo White. “OCIE helps us to maintain a strong presence with SEC registrants and to make a positive impact for the benefit of investors and our markets.”
“We share our annual examination priorities to promote compliance,” said Andrew J. Bowden, OCIE’s Director. “We have observed that when we share our areas of focus, many industry participants independently review their controls in the areas we have identified.”
The 2015 examination priorities address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies, and national securities exchanges. Areas of examination include:
Retail Investors – Retail investors are being offered products and services that were formerly characterized as alternative or institutional, including private funds, illiquid investments, and structured products. Additionally, financial services firms are offering a broad array of information, advice, products, and services to help retail investors plan for and live in retirement. OCIE will assess risks to retail investors that can arise from these trends.
Market-Wide Risks – OCIE will examine for structural risks and trends that involve multiple firms or entire industries, including: monitoring large broker-dealers and asset managers in coordination with the SEC’s policy divisions, conducting annual examinations of clearing agencies as required by the Dodd-Frank Act, assessing cybersecurity controls across a range of industry participants, and examining broker-dealers’ compliance with best execution duties in routing equity order flow.
Data Analytics – Over the last several years, OCIE has made significant enhancements that enable exam staff to analyze large amounts of data efficiently and effectively. OCIE will use these capabilities to focus on registrants and registered representatives that appear to be potentially engaged in illegal activity.
The published priorities for 2015 are not exhaustive and may be adjusted in light of market conditions, industry developments, and ongoing risk assessment activities. OCIE selected the priorities in consultation with the Commission, the SEC’s policy divisions and regional offices, the enforcement division, the SEC’s Investor Advocate, and other regulators.
Showing posts with label SEC INVESTIGATIONS. Show all posts
Showing posts with label SEC INVESTIGATIONS. Show all posts
Tuesday, January 13, 2015
Wednesday, January 29, 2014
SEC CHARGES SCOTTRADE WITH FAILING TO PROVIDE COMPLETE INFORMATION ON TRADES
FROM: SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged Scottrade with failing to provide the agency with complete and accurate information about trades done by the firm and its customers, which is commonly called “blue sheet” data.
Scottrade, which is headquartered in St. Louis, agreed to settle the charges by paying a $2.5 million penalty and admitting it violated the recordkeeping provisions of the federal securities laws.
According to the SEC’s order instituting settled administrative proceedings, broker-dealers like Scottrade are required upon request to electronically provide the SEC with blue sheet data so the agency can use it to identify and analyze trades in the course of investigations and other work. Blue sheets contain the details of each equity or options trade that is routed through clearing broker-dealers. The term “blue sheet” stems from the color of the forms originally mailed to broker-dealers to complete and return to the SEC. The process shifted to an electronic format in the 1980s.
“Blue sheet information is the lifeblood of many SEC investigations and examinations,” said Andrew J. Ceresney, director of the SEC’s Division of Enforcement. “When firms fail to provide us with accurate or complete trade data, it risks compromising our ability to detect and investigate securities law violations.”
According to the SEC’s order, the SEC staff sent electronic blue sheet requests to Scottrade in December 2011 in connection with an investigation the agency was conducting into suspicious trades made in a Scottrade online brokerage account that was the apparent victim of account intrusion. After receiving the blue sheet information, SEC staff discovered that Scottrade’s submission was incomplete as it failed to include data from a number of trades that resulted from unauthorized account intrusions. After the SEC staff contacted Scottrade questioning the data, the firm informed the agency that a computer coding error had resulted in the inadvertent omission of the trades.
The SEC’s order finds that Scottrade’s computer coding error resulted in the omission of trades from blue sheet responses it made to the SEC from March 2006 to April 2012. During that time, Scottrade failed to provide the required blue sheet information on 1,231 occasions. Scottrade has corrected the deficient code responsible for its inaccurate and incomplete blue sheet responses.
“Scottrade’s failure over six years to provide accurate and complete blue sheet trading data was egregious and violated its obligations under the securities laws,” said Daniel M. Hawke, director of the SEC’s Philadelphia Regional Office and chief of the Enforcement Division’s Market Abuse Unit. “Firms need to ensure that that they comply with their blue sheet production obligations or, as in Scottrade’s case, they will pay a heavy price if they fail to do so.”
Scottrade admits the facts underlying the charges made in the SEC’s order, which requires Scottrade to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(j), 17a-25, and 17a-4(f)(3)(v). In addition to the $2.5 million penalty, Scottrade has agreed to undertake such remedial measures as retaining an independent consultant to review its supervisory, compliance, and other policies and procedures designed to detect and prevent securities laws violations related to blue sheet submissions.
The SEC’s investigation was conducted by Lawrence Parrish and Daniel Koster of the Philadelphia Regional Office. The case was supervised by Kingdon Kase. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
The Securities and Exchange Commission today charged Scottrade with failing to provide the agency with complete and accurate information about trades done by the firm and its customers, which is commonly called “blue sheet” data.
Scottrade, which is headquartered in St. Louis, agreed to settle the charges by paying a $2.5 million penalty and admitting it violated the recordkeeping provisions of the federal securities laws.
According to the SEC’s order instituting settled administrative proceedings, broker-dealers like Scottrade are required upon request to electronically provide the SEC with blue sheet data so the agency can use it to identify and analyze trades in the course of investigations and other work. Blue sheets contain the details of each equity or options trade that is routed through clearing broker-dealers. The term “blue sheet” stems from the color of the forms originally mailed to broker-dealers to complete and return to the SEC. The process shifted to an electronic format in the 1980s.
“Blue sheet information is the lifeblood of many SEC investigations and examinations,” said Andrew J. Ceresney, director of the SEC’s Division of Enforcement. “When firms fail to provide us with accurate or complete trade data, it risks compromising our ability to detect and investigate securities law violations.”
According to the SEC’s order, the SEC staff sent electronic blue sheet requests to Scottrade in December 2011 in connection with an investigation the agency was conducting into suspicious trades made in a Scottrade online brokerage account that was the apparent victim of account intrusion. After receiving the blue sheet information, SEC staff discovered that Scottrade’s submission was incomplete as it failed to include data from a number of trades that resulted from unauthorized account intrusions. After the SEC staff contacted Scottrade questioning the data, the firm informed the agency that a computer coding error had resulted in the inadvertent omission of the trades.
The SEC’s order finds that Scottrade’s computer coding error resulted in the omission of trades from blue sheet responses it made to the SEC from March 2006 to April 2012. During that time, Scottrade failed to provide the required blue sheet information on 1,231 occasions. Scottrade has corrected the deficient code responsible for its inaccurate and incomplete blue sheet responses.
“Scottrade’s failure over six years to provide accurate and complete blue sheet trading data was egregious and violated its obligations under the securities laws,” said Daniel M. Hawke, director of the SEC’s Philadelphia Regional Office and chief of the Enforcement Division’s Market Abuse Unit. “Firms need to ensure that that they comply with their blue sheet production obligations or, as in Scottrade’s case, they will pay a heavy price if they fail to do so.”
Scottrade admits the facts underlying the charges made in the SEC’s order, which requires Scottrade to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(j), 17a-25, and 17a-4(f)(3)(v). In addition to the $2.5 million penalty, Scottrade has agreed to undertake such remedial measures as retaining an independent consultant to review its supervisory, compliance, and other policies and procedures designed to detect and prevent securities laws violations related to blue sheet submissions.
The SEC’s investigation was conducted by Lawrence Parrish and Daniel Koster of the Philadelphia Regional Office. The case was supervised by Kingdon Kase. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
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