BGC Faces Regulatory Settlement for Supervisory Lapses

<p>BGC
Financial, L.P., a member of the Financial Industry Regulatory Authority (FINRA),
has submitted a Letter of Acceptance, Waiver, and Consent (AWC) in response to
alleged rule violations. The purpose of this AWC is to propose a settlement
regarding the described rule violations. BGC has consented to the findings
without admitting or denying them, thus accepting FINRA's proposed sanctions.</p><p>Regulatory
Concerns: BGC's Supervisory System Failures</p><p>BGC,
based in New York and a member of FINRA since July 1987, currently operates 13 branches
and employs approximately 270 registered representatives. The firm's services
encompass brokerage activities related to options, fixed income, and equity
securities.</p><p>The
regulatory concern pertains to a period spanning from December 2014 to June
2023 when BGC failed to establish and maintain a supervisory system capable of
detecting potential spoofing and layering in equity securities. This failure to
uphold adequate supervision is a violation of <a href="https://www.financemagnates.com/tag/finra/">FINRA</a> Rules 3110 and
2010.</p><p>Spoofing
and layering, forms of market manipulation, involve the placement of non-bona
fide orders or multiple limit orders on one side of the market to create
misleading appearances of supply and demand. These activities can distort the
price or volume of security and deceive other market participants into
executing trades under false pretenses.</p><p>From
December 2014 to January 2021, BGC lacked a supervisory system to monitor its
traders for potential spoofing and layering. During this period, the firm's
equity trading desks executed an average of approximately 5,000 equity
transactions daily.</p><p>In
February 2021, BGC implemented automated surveillance measures to identify
potential spoofing and layering. However, these measures were found to have
certain unreasonable parameters, such as requiring the entry of large orders on
both sides of the market,
which failed to consider that these manipulative activities could also involve
smaller-sized or single orders.</p><p>Settlement
Agreement: BGC's Consent to Regulatory Sanctions</p><p>As
part of the settlement, BGC consents to the following sanctions: a censure and
a <a href="https://www.financemagnates.com/tag/financial/">financial</a>
penalty of $200,000. The firm has agreed to pay the fine upon notice of the
AWC's acceptance and has waived any right to claim an inability to pay.</p>

This article was written by Tareq Sikder at www.financemagnates.com.