According to FINRA, Elevation, LLC was censured and fined $75,000 for failing to establish a supervisory system to monitor for fraudulent trading practices such as spoofing, layering, and wash trades. The firm had no surveillance or supervisory reviews to detect these manipulative trading practices, and its written procedures did not describe how to identify different types of fraudulent trading.

The firm's trade blotter included only executed orders and did not include quotation or canceled order information, which is essential for detecting spoofing and layering. These manipulative practices involve displaying and canceling orders to deceive other market participants about supply and demand. Without access to this information, the firm's supervisory personnel could not effectively monitor for such abusive practices.

Spoofing and layering are serious forms of market manipulation that harm investors by creating false impressions of market interest. Traders use these tactics to move prices in their favor by placing orders they intend to cancel, misleading others about true supply and demand. Effective surveillance systems are critical to detecting and preventing these abusive practices.

After FINRA's findings, the firm revised its procedures to explain how to conduct and document supervisory reviews for fraudulent trading and incorporated quotation and canceled order information in its trade blotters. This case highlights the importance of proactive compliance systems. Investors benefit when firms maintain robust surveillance to detect manipulation, as it helps ensure fair and orderly markets where prices reflect genuine supply and demand.