Cantor Fitzgerald to pay $100k fine for reporting deficiencies
Cantor Fitzgerald & Co has agreed to pay a fine of $100,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From January 2020 to August 2020, Cantor published public quarterly reports on its handling of customers’ orders in National Market System (NMS) securities that failed to disclose required information and provided inaccurate and incomplete information.
After receiving warnings from FINRA in 2017 and 2019 regarding the accuracy of its Rule 606(a) reports, Cantor corrected the reports at issue. Nonetheless, in January 2020, when Cantor published its Rule 606(a) report for the fourth quarter of 2019, that report failed to disclose, as required, the material aspects of Cantor’s relationship with one of its specified execution venues, including a description of Cantor’s payment for order flow and profit-sharing relationship with the venue.
The venue was Cantor’s only execution venue for NMS stocks in the fourth quarter of 2019, and it passed along exchange rebates and applied credits to reduce Cantor’s overall execution costs.
Therefore, the firm violated Rule 606(a) of Regulation NMS and FINRA Rule 2010.
During the same period, the firm’s supervisory system, including written supervisory procedures (WSPs), was not reasonably designed to achieve compliance with Rule 606(a). By virtue of the foregoing, the firm violated FINRA Rules 3110 and 2010.
In addition to the fine, the firm has agreed to a censure.