Two BDs to Pay $4.65m for Deficient Blue Sheet Data
9 October 2019: The US Securities and Exchange Commission announced on Sept 16 that Stifel, Nicolaus & Co has agreed to pay $2.7m and BMO Capital Markets Corp has agreed to pay $1.95m to settle charges for providing incomplete and inaccurate securities trading information to the SEC. Broker-dealers are required to provide the information known as “blue sheet data,” which the SEC uses to carry out its enforcement and regulatory obligations, including investigations of insider trading and other fraudulent activity.
According to the SEC’s orders, over a period of several years, Stifel and BMO each made numerous deficient blue sheet submissions containing missing or inaccurate data, largely due to undetected coding errors. The SEC found that Stifel failed to report data for approximately 9.8m transactions and provided inaccurate information for approximately 1.4m transactions. Separately, the SEC found that BMO submitted missing or incorrect data for approximately 5.4m transactions. According to the SEC’s orders, neither firm had adequate processes designed to validate the accuracy of its submissions and each wilfully violated the broker-dealer books and records and reporting provisions of the federal securities laws.
“Firms that do not provide accurate and complete data in response to our requests undermine our efforts to detect wrongdoing and protect Main Street investors,” said Kelly Gibson, Associate Director of the SEC’s Philadelphia Regional Office. “We will continue to hold firms accountable for not taking these obligations seriously.”
The SEC’s orders found that each firm has engaged in remedial efforts to address the causes for its deficient submissions, including the retention of an outside consultant and the adoption of new policies and procedures for processing blue sheet requests.