Cantor Fitzgerald Agrees to Pay $3.2 Million to Settle Charges for Providing Deficient Blue Sheet Data

The Securities and Exchange Commission today announced that Cantor Fitzgerald & Co. has agreed to pay $3.2 million to settle charges for providing the SEC with incomplete and inaccurate securities trading information known as “blue sheet data.”

According to the SEC’s order, for almost five years, Cantor Fitzgerald made numerous deficient blue sheet submissions containing missing or inaccurate data, largely due to inadequate processes designed to validate the accuracy of its submissions and undetected coding errors.  The SEC found that Cantor Fitzgerald submitted missing or incorrect data for approximately 35 million transactions.  Broker-dealers are required to provide this information, which the SEC uses to carry out its enforcement and regulatory obligations, including investigations of insider trading and other fraudulent activity.

“The SEC depends on broker-dealers to provide it with complete and accurate trade data,” said Kelly L. Gibson, Director of the SEC’s Philadelphia Regional Office.  “When they fail to meet that obligation, it hinders our ability to detect wrongdoing and protect investors.”

The SEC’s orders found that Cantor Fitzgerald willfully violated the broker-dealer books and records and reporting provisions.  The firm admitted the findings in the SEC’s cease-and-desist order and agreed to be censured and pay a penalty of $3.2 million.  The SEC’s order also found that Cantor Fitzgerald engaged in remedial efforts to address the cause of its deficient submissions, including the retention of an outside consultant and the adoption of new policies and procedures for processing blue sheet requests.  

The SEC’s investigation was conducted by Lawrence D. Parrish, Paulina L. Jerez and Kingdon Kase of the Philadelphia Regional Office with 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 investigation was supervised by Kelly L. Gibson.