Lime Brokerage

Lime Brokerage was censured and fined $625,000 by FINRA and various exchanges for failure to maintain reasonable controls, procedures and other measures to remediate the violative conduct regarding its supervision of direct market access customer activity with respect to potential manipulative trading by its customers.

The findings stated that the firm’s supervisory system and WSPs did not provide guidance as to how the firm should review alerts of potentially manipulative trading and how it should supervise the disposition of any such alerts.

The firm tasked a single analyst with conducting a manual review of its surveillance alerts, but failed to reasonably supervise the analyst’s review and disposition of those alerts.

Trading activity by certain of the firm’s direct market access customers triggered thousands of alerts at the firm that raised red flags for potentially manipulative trading, including a variety of practices, such as layering, spoofing, ramping and marking.

The firm failed to reasonably respond to those red flags of potentially manipulative trading by its direct market access customers.

These red flags included thousands of surveillance system alerts that were generated by a foreign investment fund and a domestic investment fund.