← Broker database 2023-11-06
Tradition Securities Fined $140,000 for Order Recording and Risk Management Failures
According to FINRA, Tradition Securities and Derivatives LLC was fined $140,000 for failing to record transmission times and include correct exchanges of execution on order tickets, and for failing to establish reasonably designed financial risk management controls and supervisory procedures.
By recording incorrect exchanges on order tickets, the firm created inaccurate records that undermined regulatory oversight and trade reconstruction efforts. The firm's written supervisory procedures also failed to include reviews to ensure that appropriate surveillance personnel received immediate post-trade execution reports resulting from market access, and the firm failed to demonstrate that such reports were generated and provided to surveillance personnel.
Additionally, the firm failed to document annual reviews of its business activity related to market access to assure the overall effectiveness of risk management controls and supervisory procedures. The firm's records did not show the date of annual reviews, the individuals involved, or what was reviewed. Furthermore, the firm's 2020 certification failed to state that the CEO certified compliance with applicable securities laws or that such a review was conducted.
For investors, this case highlights the critical importance of accurate record-keeping and proper risk management at brokerage firms. Order tickets and execution records form the backbone of regulatory oversight and help protect investors by ensuring trades are properly documented and supervised. When firms fail to maintain accurate records or implement proper risk controls, they create vulnerabilities that could lead to trading errors, disputes, or even market manipulation that harms investors.