CCO Fined and Suspended for Firm’s Quote-Stuffing
FINRA fined and suspended the Chief Compliance Officer, 9 traders, and the Director of Trading of a broker-dealer charged with “quote-stuffing.” FINRA alleges the traders utilized a high frequency trading strategy that involved entering non-bona fide orders to induce other market participants into a stock to create buying or selling pressure. FINRA cited 46,000 occasions in which the firm obtained advantageous prices, resulting in $575,000 in profits.
OUR TAKE: It is unclear why FINRA acted against the CCO, other than to allege supervisory failures. However, FINRA has included CCOs in recent actions alleging general failures to supervise.