The Financial Industry Regulatory Authority announced today that it has fined three firms for alleged audit trail violations.

CIBC World Markets Corp., TradeStation Securities, Inc., and E*Trade Securities were fined a total of US$1.6 million for multi-year violations relating to FINRA’s Order Audit Trail System rules and related supervisory failures. TradeStation Securities was fined US$750,000 for failing to report approximately 23.5 million reportable order events relating to orders received. E*Trade was fined US$500,000 for failing to report “new order reports” and “route reports.” CIBC was fined US$350,000 for failing to report to OATS over 28 million orders which were generated by an affiliate. FINRA also found that the three firms did not have adequate systems of supervision in place to monitor their OATS reporting compliance.

In settling these matters, the firms neither admitted nor denied the charges, but consented to the entry of FINRA’s findings. The regulator noted that the fine for CIBC was reduced in recognition of the firm’s actions in reporting the problem to FINRA and taking prompt remedial actions to correct the problem.

“Firms must be vigilant in monitoring the accuracy and completeness of the data they provide to regulators and each firm must ensure that it reports all required order information, no matter which desk receives or handles the order,” said Tom Gira, executive vice president of FINRA’s Market Regulation department.