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FINRA Levies $6 Million Fine on Deutsche Bank For Late “Blue Sheets”

by Aziz Abdel-Qader
  • FINRA fines Deutsche Bank AG's securities arm for submitting inaccurate and late trade data.
FINRA Levies $6 Million Fine on Deutsche Bank For Late “Blue Sheets”
Finra
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The Financial Industry Regulatory Authority (FINRA), the largest independent regulator for all securities firms ‎doing business in the United States, said on Wednesday that it has fined Deutsche Bank Securities Inc. $6 million for ‎failing to provide accurate and complete “blue sheets” on ‎over 1 million trades from 2008 to 2015, according to a FINRA statement.‎

Deutsche Bank neither admitted nor denied the charges, but consented to the entry ‎of FINRA’s findings. Also, the bank has agreed to implement enhancements to meet ‎regulatory reporting requirements and retain an independent consultant to remedy ‎issues related to so-called blue sheets, as part of its settlement with the Wall Street’s self-‎regulator.‎

According to federal securities laws and self-Regulation rules, firms are required to ‎provide certain trade data, aka blue sheets, to FINRA 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. ‎

Essential ‎Data

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. ‎

Last year, the US Securities and Exchange Commission (SEC) fined Oz Management LP, $4.25 million ‎after providing inaccurate blue sheets which consequently led to inaccuracies to the tune of ‎approximately 552 million shares in the brokers’ books and records.‎

Cameron Funkhouser, Executive Vice President and Head of FINRA’s Office of ‎Fraud Detection and Market Intelligence, said: “Firms are expected to provide ‎complete, accurate and timely blue sheet data in response to regulatory requests. ‎Incomplete and inaccurate blue sheet data compromises our ability to identify ‎individuals engaging in insider trading schemes and other fraudulent activity.” ‎

‎“Firms must invest the resources necessary to ensure that they are providing ‎complete and accurate blue sheet data whenever requested – without exception,” concluded Funkhouser.

‎ According to FINRA, Deutsche Bank’s blue sheet systems experienced significant failures, ‎including programming errors in system logic, from at least 2008 through 2015. ‎These failures caused the firm to submit thousands of blue sheets to regulators that ‎misreported or omitted critical information.

The regulator said also that from January 2014 to August 2015, approximately 40 ‎percent of Deutsche Bank’s blue sheets ‎submissions did not meet regulatory ‎deadlines, typically 10 business days to ‎respond to the information request. ‎Furthermore, ‎between July and August 2015, more than 90 percent of ‎Deutsche ‎Bank’s blue sheets were not submitted to FINRA on a timely basis.‎

The Financial Industry Regulatory Authority (FINRA), the largest independent regulator for all securities firms ‎doing business in the United States, said on Wednesday that it has fined Deutsche Bank Securities Inc. $6 million for ‎failing to provide accurate and complete “blue sheets” on ‎over 1 million trades from 2008 to 2015, according to a FINRA statement.‎

Deutsche Bank neither admitted nor denied the charges, but consented to the entry ‎of FINRA’s findings. Also, the bank has agreed to implement enhancements to meet ‎regulatory reporting requirements and retain an independent consultant to remedy ‎issues related to so-called blue sheets, as part of its settlement with the Wall Street’s self-‎regulator.‎

According to federal securities laws and self-Regulation rules, firms are required to ‎provide certain trade data, aka blue sheets, to FINRA 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. ‎

Essential ‎Data

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. ‎

Last year, the US Securities and Exchange Commission (SEC) fined Oz Management LP, $4.25 million ‎after providing inaccurate blue sheets which consequently led to inaccuracies to the tune of ‎approximately 552 million shares in the brokers’ books and records.‎

Cameron Funkhouser, Executive Vice President and Head of FINRA’s Office of ‎Fraud Detection and Market Intelligence, said: “Firms are expected to provide ‎complete, accurate and timely blue sheet data in response to regulatory requests. ‎Incomplete and inaccurate blue sheet data compromises our ability to identify ‎individuals engaging in insider trading schemes and other fraudulent activity.” ‎

‎“Firms must invest the resources necessary to ensure that they are providing ‎complete and accurate blue sheet data whenever requested – without exception,” concluded Funkhouser.

‎ According to FINRA, Deutsche Bank’s blue sheet systems experienced significant failures, ‎including programming errors in system logic, from at least 2008 through 2015. ‎These failures caused the firm to submit thousands of blue sheets to regulators that ‎misreported or omitted critical information.

The regulator said also that from January 2014 to August 2015, approximately 40 ‎percent of Deutsche Bank’s blue sheets ‎submissions did not meet regulatory ‎deadlines, typically 10 business days to ‎respond to the information request. ‎Furthermore, ‎between July and August 2015, more than 90 percent of ‎Deutsche ‎Bank’s blue sheets were not submitted to FINRA on a timely basis.‎

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