U.S. securities regulator – the Financial Industry Regulatory Authority (FINRA) has about about its step to sanction the Deutsche Bank AG (NYSE:DB) unit Deutsche Bank Securities Inc. by a fine of $6 million for not providing complete and accurate data on trades in an automated format and on time after FINRA’s and the Securities and Exchange Commission (SEC) request.
In the frame of the settlement, Deutsche Bank has agreed to keep an independent consultant for its policies, systems and procedures to be improved, in connection with the blue sheet submissions.
FINRA and SEC request trade data on regular basis, called the “blue sheets,” in order to supervise the market activity o respective subjects in relation to possible manipulation of market and insider trading. According to the federal securities laws and rules, set by FINRA, companies shall provide such information to FINRA or other respective regulators electronically, when requested.
According to the blue sheets, regulators are provided with critical detailed information about securities transactions, as the security, trade date, price, share quantity, customer’s name, and if the trade was long or short. Such information is key for regulators to gain background for possible enforcement and regulatory mandates.
As the Executive Vice President and Head of FINRA’s Office of Fraud Detection and Market Intelligence – Cameron Funkhouser, stated:
“Firms are expected to provide complete, accurate and timely blue sheet data in response to regulatory requests. Incomplete and inaccurate blue sheet data compromises our ability to identify individuals engaging in insider trading schemes and other fraudulent activity. Firms must invest the resources necessary to ensure that they are providing complete and accurate blue sheet data whenever requested – without exception.”
What FINRA found was the fact, that from at least 2008 through at least 2015, Deutsche Bank failed with its blue sheet systems in case of compilation and production of blue sheet data, including programming errors in system logic and also in case of implementing improvements to meet requirements, set by the regulator. Due to these failures Deutsche Bank submitted thousands of blue sheets to regulators that misreported or omitted critical information on over 1 million trades.
Furthermore, FINRA realized that a significant number of submissions from Deutsche Bank blue sheet were provided after the set deadlines. Typically having 10 business days to respond to a blue sheet request, Deutsche Bank’s blue sheets were filed in 40% of cases between January 2014 and August 2015 past the regulatory deadline. Even more, from July to August 2015, over 90 percent of Deutsche Bank’s blue sheets were not submitted on time to FINRA.
Deutsche Bank neither admitted nor denied the charges, but provided its consent to the entry of FINRA’s findings.
For any questions or recommendations, feel free to write us on hello@goforex.eu
