Cognitive Capital LLC has agreed to pay a fine of $22,000 as a part of a settlement with Cboe Exchange for minimum net capital requirement violations.

On December 4, 2019, Cognitive Capital placed into production a coding change in the firm’s trading engine that inadvertently negatively impacted a number of the firm’s algorithms for proprietary trading. On December 5, 2019, the coding change doubled the number of shares that the Firm intended to purchase during the closing market auction. These inadvertent purchases increased the firm’s haircut by 33%.

As a result, Cognitive Capital incurred a net capital deficit of $3,644,476.

Gognitive Capital recognized the error after the closing auction and notified Cboe, by and through FINRA. The Firm’s technology team corrected the error that evening. The firm entered closing transactions on the morning of December 6, 2019 and returned to net capital compliance by 10:00 a.m. the same day.

As a result, on December 5, 2019 and December 6, 2019, the firm operated while failing to maintain its minimum net capital requirement. The acts, practices and conduct constitute violations of Section 15(c) of the Exchange Act and Rule 15c3-1 thereunder, and Cboe Rules 8.2 and 11.1.

In addition to the fine, the firm has agreed to a censure.