Article: U.S. broker sanctioned for failing to guard against market manipulation

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U.S. broker sanctioned for failing to guard against market manipulation

James Langton, 23 December 2019

Credit Suisse Securities (USA) LLC has been sanctioned by the U.S. Financial Industry Regulatory Authority (FINRA) and a trio of U.S. exchanges for supervisory violations that allowed possible market manipulation.

The firm has been fined a combined US$6.5 million for a variety of violations that stemmed from providing direct market access that allowed certain clients to engage in potentially manipulative trading activity, including spoofing, layering and wash trading.

Credit Suisse settled the allegations without admitting or denying the charges. The monetary sanctions were divided between FINRA and three exchanges — CBOE Global Markets, Nasdaq and the New York Stock Exchange.

According to a release, between 2010 and 2014, Credit Suisse’s direct access clients generated over 50,000 alerts at FINRA and the exchanges for suspicious trading activity. Three of Credit Suisse’s clients accounted for the majority of those alerts, FINRA said, and they generated about 20% of its order flow.

FINRA found that Credit Suisse didn’t have a supervisory system to guard against manipulative trading trading by its direct market access clients.

“As a result, orders for billions of shares entered the U.S. markets without being subjected to post-trade supervisory reviews for such potential manipulative activity,” FINRA and the exchanges said in a joint statement.

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