Piper Sandler & Co has agreed to pay a fine of $95,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

Between January 2022 and December 2023, Piper Sandler published eight Rule 606(a) reports that included inaccurate options order information with respect to not-held options orders.

Specifically, due to a coding error, one of the firm’s Rule 606 reporting vendors – through which a small portion of the firm’s options orders were routed – calculated the value of certain firm options orders as if each contract was for one share of an underlying stock, when in fact a standard option contract represents 100 shares of the underlying stock.

As a result, the firm overstated its reportable options orders, which caused inaccuracies in the statistical data related to its options orders, including order percentages and payment received or paid.

During the same period, Piper Sandler published five Rule 606(a) reports that failed to adequately disclose material aspects of its relationship with certain venues identified in its Rule 606(a) reports.

Specifically, despite prior notification from FINRA regarding deficiencies in its material aspects disclosures, the firm’s disclosures did not set out a complete description of its payments for order flow or the profit-sharing relationship it had with certain execution venues.

In particular, Piper Sandler stated that its primary options executing broker “may” pass through fees and rebates it received on Piper Sandler’s orders when in fact, it passed through the fees and rebates in full.

After the relevant period, the firm worked with its Rule 606(a) reporting vendor to correct the reporting errors, made enhancements to its material aspect disclosures, and republished certain Rule 606 reports with updated information.

By publishing quarterly reports with inaccuracies and failing to disclose complete material aspects of its routing arrangement with its options executing broker, Piper Sandler violated Regulation NMS Rule 606 and FINRA Rule 2010.

Also, from January 2022 through December 2023, Piper Sandler failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Rule 606(a).

The firm’s procedures failed to provide guidance on how supervisory reviews would be conducted or what would be reviewed. Moreover, the firm failed to conduct reasonable supervisory reviews of its Rule 606(a) reports, including by failing to reasonably review the accuracy of statistical information it obtained from one of its 606(a) reporting vendors.

After the relevant period, the firm revised its policies and procedures related to Rule 606 reporting.

By failing to reasonably supervise its Regulation NMS Rule 606 reporting, Piper Sandler violated FINRA Rules 3110 and 2010.

On top of the $95,000 fine, the firm consented to a censure.