The U.S. Securities and Exchange Commission fined two broker-dealers a total of $4.65 million for submitting deficient blue sheet data, according to a news release.
St. Louis-based Stifel, Nicolaus & Co. agreed to pay $2.7 million and Toronto-based BMO Capital Markets agreed to pay $1.95 million to settle charges that each filed incomplete and inaccurate securities trading information, known as “blue sheet data.”
The SEC uses blue sheet data to carry out enforcement and regulatory obligations including investigations of insider trading and other fraudulent activity.
The firms admitted the findings in the SEC’s cease and desist orders. Both companies agreed to be censured and to pay the reported penalties for actions dating back over a period of several years.
According to the SEC’s orders, Stifel and BMO each made numerous submissions containing undetected coding errors.The SEC found that Stifel failed to report data for approximately 9.8 million transactions and provided inaccurate information for approximately 1.4 million transactions. Separately, the SEC found that BMO submitted missing or incorrect data for approximately 5.4 million transactions.
The SEC orders also reported that neither firm had adequate procedures in place to validate the accuracy of its submissions, and that each violated books, records and reporting provisions of federal securities laws.
“Firms that do not provide accurate and complete data in response to our requests undermine our efforts to detect wrongdoing and protect Main Street investors,” said Kelly Gibson, associate director for the SEC’s Philadelphia Regional Office. “We will continue to hold firms accountable for not taking these obligations seriously.”
The SEC disclosed that both firms engaged in remedial efforts to address the deficient submissions, including the retention of outside consultants and the adoption of new policies and procedures for processing blue sheet requests.