Friday, October 30, 2009

Disciplinary Actions

It's Friday morning and, as usual, I'm at the FINRA website looking at recent disciplinary actions. For the month of October there are about 40 pages' worth of infractions, ranging from recordkeeping mishaps to outright bad behavior. I'll place the link below, or you can just go to, then "industry professionals," and then look under "enforcement" for "disciplinary actions." This month you'll find several small fines resulting from sloppy reporting of trades. You'll notice that the same firm often has two or three violations in the same month. And you'll see that Regulation SHO, in which short sales have to be executed very carefully and properly, is a hot topic for the regulators. Reg SHO is all about making sure that when shares are sold short, there actually are shares available. Otherwise, the laws of supply and demand are being manipulated, and market manipulation is the number-one thing that the SEC and FINRA try to prevent. Before executing the short sale, the broker-dealer has to locate the securities and reasonably believe they can be delivered. Of course, the procedures involved to "locate" the securities are new, and it's tough to get the supervisory system in place. Luckily, FINRA is there to help motivate the firms to improve their systems by handing out fines and naming names .
I'll let you take it from here:

No comments:

Post a Comment