Elevation, LLC

Elevation, LLC was fined $75,000 for failing to establish and maintain a supervisory system, including WSPs, reasonably designed to achieve compliance with applicable federal securities laws and FINRA rules prohibiting fraudulent trading in equity securities.

The findings stated that the firm had no supervisory system, including surveillance or supervisory reviews, to monitor for any type of fraudulent trading.

In addition, the firm’s WSPs did not include procedures that described how to review the trade blotter to identify different types of fraudulent trading, such as spoofing, layering, and wash trades, or explain why such reviews were required.

The WSPs required the firm to conduct a daily manual review of the firm’s trade blotter, which was done by the firm’s supervisory personnel. The firm’s trade blotter, however, included only executed orders, and did not include quotation or canceled order information, which is necessary to detect spoofing and layering because each involves the display and cancelation of orders to deceive other market participants.

Ultimately, the firm revised its WSPs to explain how to conduct and document the firm’s supervisory reviews for fraudulent trading. The firm also incorporated quotation and canceled order information in the firm’s trade blotters for spoofing and layering reviews.