Oppenheimer & Co to pay $450,000 fine for alleged Cboe rules violations
Oppenheimer & Co. Inc. has agreed to pay a fine of $450,000 as a part of a settlement with Cboe Exchange, Inc.
The firm neither admitted nor denied that violations of Exchange Rules have been committed.
From January 1, 2017 through on or about September 15, 2021 (the Relevant Period), in at least 809,000 instances, Oppenheimer failed to report, or inaccurately reported, positions to the Large Options Position Report system (LOPR) where the Firm’s LOPR reporting system did not recognize that the accounts of certain customers were acting in concert (“AIC”).
Specifically, where an account held positions with fewer than 200 options contracts, Oppenheimer’s LOPR reporting system erroneously failed to aggregate the account with accounts with which it was acting in concert.
As a result, the firm failed to report approximately 21,000 positions to the LOPR in approximately 370,000 instances.
Where an account or AIC group held options positions exceeding 200 contracts, Oppenheimer’s LOPR reporting system erroneously failed to aggregate the account with accounts with which it was acting in concert. As a result, in approximately 439,000 instances, the firm reported approximately 29,000 positions to the LOPR that included inaccurate AIC information.
Oppenheimer represents it remediated this LOPR reporting issue by September 15, 2021.
During the Relevant Period, Oppenheimer failed to establish a supervisory system, including written supervisory procedures (WSPs) reasonably designed to prevent and detect violations of LOPR reporting rules for accounts acting in concert.
While Oppenheimer had WSPs in place during the Relevant Period relevant to its LOPR reporting obligations, those WSPs focused only on the firm’s process for identifying AIC relationships at account opening, and did not provide guidance for how the firm should identify changes in AIC relationships.
Oppenheimer also did not have any system of follow-up and review to identify AIC relationships if AIC information changed or to verify the AIC information the firm reported to the LOPR matched what was stored in its customer account records.
On top of the fine, the firm has agreed to a censure.