The Securities and Exchange Commission on Monday said it has fined three broker dealers — Citadel Securities, Natixis Securities Americas, and MUFG Securities Americas — collectively $6.2 million for failing to provide accurate and complete “blue sheets” on more than 80 million trades over a period of several years.
In an administrative order, the SEC faulted the brokers for providing deficient blue sheet submissions that included incorrect order execution times, missing exchange codes, transaction type identifiers, opposing broker number and contra-party identifiers.
The three firms admitted to the charges and agreed to pay penalties of $3.5 million for Citadel Securities, $1.25 million for Natixis, and $1.4 million for MUFG. They will also enhance their reporting systems to remedy issues related to so-called blue sheets, as part of its settlement with the US top regulator.
According to federal securities laws, firms are required to provide certain trade data, aka blue sheets, to SEC and other regulators electronically upon request. Finra and the Securities and Exchange Commission (SEC) regularly request such information to help prevent and stop market manipulation and insider trading.
Capitalise Appoints William Klippel as its Head of SalesGo to article >>
Blue sheets provide critical detailed information about securities transactions, including the security, trade date, price, share quantity, customer name, and whether it was a buy, sale, or short sale transaction.
The SEC had previously fined Citigroup a record $7 million penalty for similar compliance failures. Also, Credit Suisse and Oz Management LP, $4.25 million were both fined $4.5 million.
According to SEC, Citadel Securities’ blue sheet systems experienced significant failures, which caused the firm to submit nearly 80 million trades of blue sheets to regulators that misreported or omitted critical information. Natixis and MUFG submitted incorrect data for approximately 150,000 trades and 650,000 trades, the agency said.
“We routinely use blue sheet data to detect wrongdoing and protect Main Street investors through our enforcement efforts. Firms must be diligent and take seriously their obligations to provide accurate and complete data in response to our requests,” said Kelly Gibson, Associate Regional Director of the SEC’s Philadelphia Regional Office.