Sumo Capital, LLC has agreed to pay a fine of $100,000 as a part of a settlement with Cboe Exchange, Inc.

The firm neither admitted nor denied that violations of Exchange Rules or the Securities Exchange Act of 1934, as amended (“Exchange Act”) and Exchange Act rules have been committed.

From January 2022 to the present, Sumo failed to establish, document, and maintain a system of risk management controls and supervisory procedures reasonably designed to manage the financial, regulatory, and other risks of its business activity. Sumo’s risk management procedures failed to document the Firm’s rationale for implementing the thresholds for its pre-trade capital controls. Sumo also had no documentation showing how it determined that its capital control thresholds were reasonable.

From January 2022 to the present, Sumo failed to document adjustments that were made to its pre-trade control thresholds. Sumo’s procedures stated that the Risk Manager may adjust the thresholds and must document any changes, but the procedures did not require that the rationale for adjustments be documented.

These acts, practices, and conduct constitute violations of Exchange Act Rule 15c3-5(b) and Cboe Rule 8.2, in that the firm failed to establish, document, and maintain risk management procedures reasonably designed to manage the financial, regulatory, and other risks of its business activity.

Sumo failed to, no less frequently than annually, review its business activity in connection with market access to assure the overall effectiveness of its risk management controls and supervisory procedures.

Specifically, in 2020 the firm failed to perform a timely review of its business activity in connection with market access to assure the overall effectiveness of its risk management controls and supervisory procedures. Sumo’s 2020 annual review was not completed until May 2021, which was more than one year after the Firm’s previous review that was completed in January 2020.

In 2022 and 2023, Sumo failed to document its annual review of its business activity in connection with market access. The firm’s annual review documents from 2022 and 2023 do not contain a specific discussion of Rule 15c3-5. Those documents also did not reference any review of the overall effectiveness of the Firm’s risk management controls and supervisory procedures related to market access.

In 2020 and 2021, Sumo failed to, on an annual basis, certify that the Firm’s risk management controls and supervisory procedures complied with paragraphs (b) and (c) of Rule 15c3-5. Specifically, Sumo’s annual certifications for 2020 and 2021 were not signed by the Firm’s Chief Executive Officer or an equivalent officer.

These acts, practices, and conduct constitute violations of Exchange Act Rule 15c3-5(e)(1) and Cboe Rule 8.2, in that the firm did not perform a timely periodic review of its market access business in 2020 and did not document its annual review in 2022 and 2023.

Sumo has relevant disciplinary history with respect to Exchange Act Rule 15c3-5. In June 2021, Sumo consented to a censure and aggregate fine of $57,500 for, among other violations, violations of Exchange Act Rules 15c3- 5(c)(1)(i), (c)(2)(ii), and (c)(2)(iv).

In light of the alleged rule violations described above, and prior relevant disciplinary history, the firm consented to the imposition of:

• a censure; and
• a monetary fine in the amount of $100,000.