FINRA fines Performance Trust for TRACE reporting deficiencies
Performance Trust Capital Partners, LLC has agreed to pay a fine of $115,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA). The settlement concerns violations of FINRA rules about TRACE reporting.
From July 2018, through June 2020, Performance Trust failed to report 1,247 TRACE- eligible security transactions to TRACE within the 15-minute timeframe required by FINRA Rule 6730(a) and without any applicable exception. This constituted 2.65% of the firm’s TRACE-eligible securities transactions during this period, higher than the industry average for this period.
Therefore, Respondent violated FINRA Rules 6730(a) and 2010.
Also, from July 2018, through June 2020, Performance Trust failed to establish and maintain a supervisory system reasonably designed to achieve compliance regarding timely reporting of TRACE-eligible security transactions to TRACE. During this period, the firm tracked its late reporting to TRACE and imposed small fines and penalties on staff involved in late reporting.
However, the firm did not remediate its ongoing late TRACE reporting effectively. The firm failed to reasonably train its supervisors regarding their responsibilities to conduct oversight and follow-up with staff regarding TRACE reporting. The firm failed to reasonably train its staff regarding their obligation to timely report trades to TRACE. The firm’s system of fines and penalties for late reporting was ineffective because it did not deter non-compliance and was inconsistently applied.
Furthermore, the firm also failed to allocate sufficient compliance department and administrative staff resources needed to reasonably monitor, surveil and follow up on late reporting, given the firm’s trading volume, which contributed to the firm’s late TRACE reporting.
Therefore, the firm violated FINRA Rules 3110(a) and 2010.
On top of the fine, Performance Trust has consented to a censure.