Two Broker-Dealers to Pay $4.65 Million in Penalties for Providing Deficient Blue Sheet Data
FOR IMMEDIATE RELEASE
Washington D.C., Sept. 16, 2019 —
The Securities and Exchange Commission today announced that Stifel, Nicolaus & Co., Inc. has agreed to pay $2.7 million and BMO Capital Markets Corp. has agreed to pay $1.95 million 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 9.8 million transactions and provided inaccurate information for approximately 1.4 million transactions. Separately, the SEC found that BMO submitted missing or incorrect data for approximately 5.4 million transactions. According to the SEC's orders, neither firm had adequate processes designed to validate the accuracy of its submissions and each willfully 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.
The firms admitted the findings in the SEC's cease and desist orders and agreed to be censured and to pay penalties of $2.7 million for Stifel and $1.95 million for BMO.
The SEC's investigation of Stifel was conducted by Lawrence D. Parrish, Paulina L. Jerez, and Kingdon Kase of the Philadelphia Regional Office and Daniel L. Koster of the Complex Financial Instruments Unit with assistance from Jonathan Vogan of the Office of Compliance Inspections and Examinations Quantitative Analytics Unit. The SEC's investigation of BMO was conducted by Han Nguyen, Rachael Clarke, and Scott A. Thompson of the Market Abuse Unit. The investigations were supervised by Kelly L. Gibson and Joseph G. Sansone, Chief of the SEC's Market Abuse Unit. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.