On September 16, 2019 the Securities and Exchange Commission (“SEC”) announced that Stifel, Nicolaus & Co. (“Stifel”) and BMO Capital Markets Corp. (“BMO”), two large broker-dealers, agreed to pay fines of $2.7 million and $1.95 million, respectively, to settle charges for providing the SEC with inaccurate and incomplete securities trading information, known as “blue sheet data.”
The SEC’s investigation found that Stifel and BMO made frequent deficient blue sheet submissions, primarily due to undetected software coding errors. According to the SEC, Stifel failed to report data for approximately 9.8 million transactions and provided erroneous information for approximately 1.4 million. According to the SEC, BMO’s deficiencies led to missing or incorrect data for 5.4 million transactions. Inaccurate reporting of blue sheet data impedes regulators ability to halt harmful or fraudulent activity, such as insider trading, which can potentially harm investors and the integrity of the markets.
The SEC found that both firms lacked adequate systems for catching these errors and did not have proper processes in place to validate the accuracy of submissions. As such, the SEC determined that Stifel and BMO both willfully violated the broker-dealer books and records and reporting requirements of federal securities laws.
Stifel and BMO admitted to the SEC’s findings in the cease and desist orders, agreed to censure, and to pay penalties of $2.7 million.
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of investment and securities fraud. Additionally, attorneys at Lax & Neville are experienced with employment law in the financial services industry, and representing clients in inquiries and investigations conducted by the SEC and the Financial Industry Regulatory Authority (“FINRA”). If you are a victim of fraud or are a Financial Advisor or Broker-dealer with a prospective regulatory issue, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.