Elevation LLC has agreed to pay a fine of $75,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From January 2016 through April 2022, Elevation’s supervisory system, including its written supervisory procedures (WSPs), was not reasonably designed to detect potential fraudulent trading, including spoofing, layering, and wash trades, in equity securities.
Elevation had no supervisory system, including surveillance or supervisory reviews, to monitor for any type of fraudulent trading, including spoofing, layering, and wash trades.
The WSPs required the firm to conduct a daily manual review of the firm’s trade blotter, which was done by the firm’s supervisory personnel. However, the WSPs did not include procedures that describe how to review the trade blotter to identify different types of fraudulent trading, such as spoofing, layering, and wash trades, or explain why such reviews were required.
In addition, the firm’s trade blotter included only executed orders, and did not include quotation or canceled order information, which is necessary to detect spoofing and layering because each involves the display and cancelation of orders to deceive other market participants.
By virtue of the foregoing, Elevation violated FINRA Rules 3110 and 2010.
On top of the fine, the firm has agreed to a censure.
