Cantor Fitzgerald

Cantor Fitzgerald was fined $50,000 for failing to implement policies and procedures that reasonably avoid displaying, or engaging in a pattern or practice of displaying, locking or crossing quotations in OTC equity securities.

The findings stated that in certain situations, the firm locked or crossed quotations in OTC equity securities and either did not contact other market participants prior to locking or crossing the market, or otherwise failed to take reasonable steps to unlock or uncross the market.

The firm’s policies and procedures designed to avoid locking and crossing quotations in OTC equity securities did not provide its traders with reasonable guidance for how to avoid or resolve a locked or crossed market.

The findings also stated that the firm failed to establish, maintain and enforce WSPs that were reasonably designed to achieve compliance with FINRA Rule 6437.

The firm’s supervisory manual that required a supervisor to review a report that identified each instance of locked or crossed markets in OTC equity securities, did not specify the process by which the supervisor was required to review the instances that were identified by the firm’s supervisory system.

 In addition, while the firm updated its WSPs, they still failed to provide any guidance on to how to perform a supervisory review for whether a trader was locking or crossing the market. Later, the firm sold its wholesale OTC market making business and ceased conducting business that would require compliance with FINRA Rule 6437.