Truist Securities, Inc.

SunTrust Robinson Humphrey, Inc. nka Truist Securities, Inc. was censured and fined $1,250,000 for engaging in principal trading designed to increase the trading volume in certain securities and overstated its advertised trading volume in those securities.

The findings stated that the firm created and maintained a list that was provided to its equity traders, which contained the names of companies that were current or prospective investment banking clients, ranked how much of each company’s stock the firm traded compared to other broker-dealers and included a target trade ranking range—a goal for where the investment banking department wanted the firm to rank.

In several instances, the firm’s trading volume increased on the first day a stock was added to the list, and in one instance, the firm’s principal trading represented as much as 46 percent of the total daily volume in that security. To achieve this result, the firm sometimes entered principal orders to buy and sell shares of stocks on the list in quick succession, sometimes losing money but increasing the firm’s volume in those securities.

Certain traders at the firm also overstated their advertised trading volume to media sources that published trade rankings, representing that the firm had traded more stock than it actually had. Through these actions, the firm made it appear that it was more active in the stock of certain issuers that were either current or prospective clients.

After receiving an inquiry from FINRA, the firm conducted an internal investigation, self-reported the cause and scope of the over-advertising and instituted remedial changes. The findings also stated that the firm’s supervisory system was not reasonably designed to achieve compliance with FINRA Rule 5210.

Although the firm had a restricted list and a watch list, as well as surveillance to review trading in the securities on those lists, the surveillance only reviewed the traders’ personal accounts—not the firm’s principal accounts.

Moreover, the firm had surveillance reports designed to detect potentially manipulative trading, including wash trades, but the firm had no controls or reviews designed to identify its equity traders’ orders to buy and sell stocks in similar or the same quantities within short periods of time in the firm’s principal accounts.

Finally, the firm had no procedure or designated supervisor to review the firm’s trading volume and compare it to the volume reported to third party publishing platforms.