An investment banking and broker-dealer firm settled NYSE Arca and NYSE American charges for failing to submit, or submit in a timely manner, notifications in connection with its engagement in the distribution of securities. The firm settled related charges with FINRA for its failure to timely file notifications under SEC regulations prohibiting manipulation of securities offerings (“Regulation M“).

In its Letter of Acceptance, Waiver, and Consent (“AWC”), NYSE Arca found that the firm failed to timely and accurately submit Restricted Period Notifications, Trading Notifications, and Trading Notifications for Actively Traded Securities pursuant to Regulation M Rule 101 (“Activities by distribution participants”). NYSE Arca found:

  • administrative errors;
  • failure to monitor for publicly available information that triggered notification requirements; and
  • misunderstandings as to the notification requirements, including (i) basing its Restricted Period Notification submissions on the anticipated date of the first concluded trading session instead of five days prior to the offering price determination and (ii) filing its Trading Notifications as soon as possible following its knowledge of the outcome of the shareholder vote instead of the date of the shareholder meeting.

In addition, NYSE Arca found that the firm did not establish, maintain or enforce reasonably designed written supervisory procedures for compliance with NYSE Arca Rule 9.5190-E (“Notification Requirements for Offering Participants”). Specifically, NYSE Arca stated that while the firm had operational procedures concerning what steps should be taken when filing Regulation M notifications, it did not carry out any supervisory reviews to ensure that requirements were met.

As a result of its findings, NYSE Arca determined that the firm violated NYSE Arca Equities Rules 5190 (“Notification Requirements for Offering Participants”), 6.18(c) and 11.18(c) (“Written Procedures”) and NYSE Arca Rule 9.5190-E.

In its AWC, NYSE American found that the firm participated in syndicate covering transactions in relation to the offering of an NYSE American-listed security, but did not provide written notice regarding its intention to participate prior to engaging in the transactions. As a result, NYSE American determined that the firm violated Regulation M Rule 104 (“Stabilizing and other activities in connection with an offering”) and NYSE American Rule 5190(e) (“Notice of Stabilizing Bids, Penalty Bids and Syndicate Covering Transactions in Listed Securities”).

To settle the charges, the firm agreed to (i) a censure and (ii) an $85,000 fine, $28,000 of which would be paid to NYSE Arca, and $5,000 to NYSE American.

NYSE Arca and NYSE American noted that acceptance of the AWC is conditioned upon the acceptance of similar settlement agreements with the Nasdaq Stock Market LLC and FINRA for related violations in connection with this misconduct.