According to FINRA, Puma Capital, LLC was fined $100,000 for failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent trade-throughs.

Despite receiving a warning from FINRA, the firm had no policy or process to determine whether the intermarket sweep orders (ISOs) it routed were received and executed as intended by the venues to which it directed them. The firm relied on its order management system to route ISOs when filling orders from its inventory that would trade through a protected quote at another venue.

Due to a coding issue in the firm's OMS, venue identifications for newly-added venues were left blank in electronic messages sent to the broker-dealer providing routing services. This caused ISOs directed to these venues to be executed in the routing broker's dark pool rather than on the intended exchanges, resulting in trade-throughs of protected quotes. After discovering this issue with one venue and fixing it, the firm still failed to implement procedures to verify ISO routing, allowing the same coding error to recur with three other venues.

Later, an update to the routing broker's system inadvertently caused it to stop appending proper execution instructions to ISOs, again causing trade-throughs that the firm failed to identify. Only after these repeated failures did the firm begin obtaining reports to verify where its ISOs were actually being executed.

Trade-throughs occur when a trade is executed at a price inferior to the best available price displayed on another trading venue. Regulation NMS prohibits trade-throughs to ensure investors receive the best available prices. When firms fail to properly route orders or verify execution quality, investors may receive worse prices than they should, resulting in real economic harm. This case demonstrates the importance of firms implementing robust controls and monitoring systems to ensure customer orders receive proper handling and best execution.