FINRA Fines Morgan Stanley $80,000 for Supervisory Failures, Deletion of 21k OTC Options Positions
Michael Edmiston
Stock Law, 13 June 2016
Morgan Stanley & Co. LLC received a censure and $80,000 fine after a FINRA investigation determined the firm improperly deleted 21,374 over-the-counter (OTC) options positions required to be reported to the Options Clearing Corporation (OCC)’s LOPR system, thereby rendering the LOPR data inaccurate.
FINRA wrote that, “The accuracy of LOPR data is essential for the analysis of various potential violations, including insider trading, position limits, exercise limits, front-running, capping and pegging, mini-manipulation, and marking-the-close.” The identification process assists regulators in identifying potential market manipulation by users who hold large options positions, such that deleting such information may adversely affect the industry’s ability to detect such violations.
