ACS Execution Services, LLC
The findings stated that the firm incorrectly believed that it could rely on a broker-dealer client’s locate when effecting a short sale for its own account to facilitate net trading. As a result, the firm effected at least 10 million short sales for its own account to facilitate short sale orders on a net basis without borrowing the securities, entering into a bona fide arrangement to borrow the securities, or having reasonable grounds to believe the securities could be borrowed so that they could be delivered on the date delivery was due.
The findings also stated that the firm failed to establish and maintain a supervisory system, including WSPs, reasonably designed to achieve compliance with Rule 203(b)(1) of Regulation SHO. The firm’s WSPs incorrectly indicated that the firm could rely on a broker-dealer client’s locate when facilitating a client order through a separate principal order for the firm’s account.
Although the firm required its broker-dealer clients to represent they obtained a locate, it did not implement any other supervisory system, surveillance, or review to monitor its compliance with or application of the locate requirement of Rule 203(b)(1).
