Network 1 Financial Securities

Network 1 Financial Securities was fined $25,000 for failing to provide customers complete annual notifications required under Rule 606(b)(2) of Regulation National Market System (Reg NMS) under the Exchange Act.

The findings stated that the firm failed to notify customers:

• That they could request information on whether orders were filled on a held or not held basis;

• If the order involved options contracts, the identity of the venue to which the customer’s orders were routed for execution in the six months prior to the request;

• Whether the orders were directed or non-directed orders, and the time of the transactions, if any, that resulted from such orders.

The findings also stated that the firm failed to establish a supervisory system, including WSPs, that was reasonably designed to achieve compliance with Rule 606.

The firm’s supervisory system, including its WSPs, did not provide for a review to confirm that the annual notification was sent to customers, nor did it include a review for accuracy of the firm’s reports.