According to FINRA, Raymond James & Associates, Inc. was censured and fined $300,000 for sending customers trade confirmations that inaccurately disclosed the firm's execution capacity or whether the trade was executed at an average price, or inaccurately disclosed or omitted its status as a market maker in the security.

When the firm acted in more than one capacity in executing orders, it did not provide each specific capacity that it acted in on the customer confirmations. Instead, the firm disclosed that it acted in a mixed capacity and that the breakdown of execution capacity is available upon request. The firm's system prevented it from populating the specific capacities that the firm acted in if it acted in more than one capacity on a transaction.

Due to a programming error, the firm sent customers trade confirmations that incorrectly disclosed transactions as average price executions when the firm filled the order in a single execution. A review of two of the firm's order management systems revealed that it incorrectly identified single executions as average price executions on confirmations issued to customers.

Moreover, the firm failed to disclose or inaccurately disclosed that it was a market maker on confirmations sent to customers. This issue stemmed from a programming error that impacted the input that identified the accurate market maker status on trade confirmations.

The firm has since updated its systems to specify each capacity that it acted in and properly identify whether transactions were average price executions, as well as corrected the programming error.

Trade confirmations are critical documents that provide customers with important information about how their orders were executed. The capacity in which a firm acts (agent, principal, or market maker) affects the obligations the firm owes to the customer and can impact the pricing of the transaction. When a firm acts as a market maker, it may have an inventory position that creates conflicts of interest. Similarly, disclosure of whether a trade was executed at an average price or a single price is important for customers to understand how their order was filled.

This case illustrates the importance of firms having accurate systems for generating trade confirmations and the need to promptly identify and correct system errors that result in inaccurate disclosures to customers.