According to FINRA, BofA Securities, Inc. was censured and fined $325,000 for publishing inaccurate monthly reports of order executions required under Rule 605 of Regulation National Market System.

The violations stemmed from multiple reporting errors. First, the firm improperly combined statistical information for its broker-dealer and alternative trading system (ATS) market centers in a single report rather than publishing separate reports for each. This led to misclassification of certain mid-point peg immediate or cancel orders and immediate or cancel orders into incorrect order type categories. The firm later implemented a separate stand-alone report for its ATS market center to prevent these issues from recurring.

Additionally, various technological problems caused further inaccuracies in the firm's broker-dealer market center reports. The firm misclassified orders based on incorrect order quantities that didn't reflect prior executions, failed to properly attribute executions to canceled-and-replaced orders, used incorrect quotations, misclassified some inside-the-quote orders as at-the-quote orders, and excluded certain reportable executions entirely. Coding errors in the new ATS report also caused the firm to omit certain executed orders.

FINRA also found that the firm's supervisory system was inadequately designed to ensure compliance with Rule 605. The firm had no system to check report accuracy initially, and it took over six months to implement a system that checks for a broader set of inconsistencies and missing information.

This case demonstrates the importance of accurate order execution reporting, which provides transparency to investors about how their orders are handled. Rule 605 reports help investors evaluate broker performance and make informed decisions about order routing. Firms must maintain robust systems to ensure data accuracy and have proper supervisory procedures to detect and correct errors promptly.