Elevation LLC agreed to pay a $75,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From January 2016 to April 2022, Elevation’s supervisory system, including its written supervisory procedures (WSP), was not reasonably designed to detect potential fraudulent transactions, including spoofing, framing and laundering, in equity securities.
Elevation did not have a system of oversight, including surveillance or supervisory controls, to monitor any type of fraudulent trading, including spoofing, layering, and wash trading.
The WSPs required the company to conduct a daily manual review of the company’s trade mark, which was done by the company’s supervisory staff. However, the WSPs did not include procedures describing how the trade blotter would be audited to detect different types of fraudulent transactions, such as counterfeits, layers and wash trades, nor did they explain why such reviews were required.
In addition, the firm’s trading blotter included only executed orders and did not include bid or canceled order information, which is essential for detecting spoofing and framing because each involves placing and canceling orders to deceive other market participants.
By virtue of the foregoing, Elevation violated FINRA Rules 3110 and 2010.
In addition to the fine, the company agreed to a reprimand.