M1 Finance LLC agreed to pay a $400,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From March 2016 to the present, M1 Finance violated Regulation SHO, Rule 203(b)(1) and 200(g), and FINRA Rule 2010 by conducting more than 12 million short sales without identifying securities available for lending and with inaccurate marking these orders for as long.
By inaccurately recording these short sales and another 3.5 million capital purchase orders as executed in a “dealer” capacity, the firm also kept inaccurate books and records and violated Exchange Act Section 17(a), Rule 17a- 3 of the Exchange Act, and FINRA Rules 4511 and 2010.
Finally, from March 2016 to the present, M1 Finance violated FINRA Rules 3110 and 2010 by failing to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the provisions of Regulation SHO order marking requirements and applicable books and records rules and regulations.
M1 Finance, a FINRA member firm since March 2016, operates a retail and proprietary trading business.
In addition to the fine, the company agreed to a reprimand.