FINRA FINES 3 FIRMS FOR OATS REPORTING VIOLATIONS
FINRA fined 3 firms a total of $1.6 Million for failing to report trades to the OATS system over a mutli-year period. The OATS system (aka Order Audit Trail System) was created to create an audit trail of order, quote, and trade information for designated security types. NASD created OATS to create transparency in the markets. Without an automated system for reporting and supervision, firms can easily run afoul of the OATS rules (Conduct Rules 6950-6958).
OUR TAKE: During regulatory exams over the last couple of years, NASD/FINRA has been routinely citing deficiencies in firms’ OATS reporting. With this action, FINRA is signaling that it will also levy fines and penalties.