Abstract：BofA Securities, Inc. (BofAS) has agreed to pay a $155,000 fine and accept a censure from the Financial Industry Regulatory Authority (FINRA) after FINRA found multiple violations of market trading and supervisory rules.
BofA Securities, Inc. (BofAS) has agreed to pay a $155,000 fine and accept a censure from the Financial Industry Regulatory Authority (FINRA) after FINRA found multiple violations of market trading and supervisory rules.
According to FINRA, between September 2014 and August 2022, BofAS executed over 11,000 off-exchange trade-throughs that were incorrectly reported using an Outbound ISO Exception modifier. Due to system latency issues, these trades were executed with delays of one second or more—disqualifying them from the exception.
From January 2015 to July 2023, the firms electronic order management system only processed the top eight quotation levels from national exchanges. When no protected quotes were detected, the system failed to route ISOs properly, resulting in approximately 42 potential trade-throughs.
Between November 2019 and June 2020, a BofAS trading desk also manually executed trades outside the national best bid and offer (NBBO), causing roughly 47 violations of SEC Rule 611(b). In early 2021, the firm sent ISOs with incorrect FIX tag information, resulting in 3,475 rejected orders and 23 unqualified trade-throughs.
FINRA‘s investigation revealed that BofA Securities’ supervisory systems and written supervisory procedures (WSPs) were not adequately designed to detect or prevent these compliance failures. The firm also failed to regularly review ISO rejection messages and potential trade-throughs.
Overall, FINRA concluded that BofAS violated Exchange Act Rule 611 and FINRA Rules 3110(a), 3110(b), and 2010, as well as NASD Rule 3010.
This enforcement action underscores FINRAs ongoing focus on market integrity, compliance oversight, and accurate trade reporting by major financial institutions.
