Jefferies LLC has agreed to pay a fine of $ 1 million as part of a settlement with the Financial Industry Regulatory Authority (Finra).
Between September 2009 and July 2022, Jefferies did not identify some non -cash borrowing from non -specialized titles associated with short sales by institutional customers who caused over -exploitation of charges in the shelters and reserves of PAB reserves and reserves Customer reserves and PAB reserves.
During his business, Jefferies borrowed securities to cover both institutional transactions with customers and fixed, and pledged cash or titles for the borrowed titles. To execute the calculations of its reserves, the business used an electronic system that received data from various sources.
Between September 2009 and July 2022, the system did not distinguish whether a borrowed security was secured by titles that met the definition of specialized securities in accordance with Article 15c3-3 (A) (6). Because only non -meters are borrowed secured by specialized securities or other acceptable collateral can be considered as charges to the reserve type, Jefferies is inappropriate as charges that its non -meters are borrowed secured by non -specialized mobile values, resulting in their reserves.
As a result, the company carried out 136 reserves of customers from $ 9,697,733 to $ 532,610,055 and three PAB reserves ranging from $ 3.4 million to $ 42,552,620.
As a result, Jefferies violated the Law on Exchange § 15 (c), the article on the exchange of 15c3-3 (e) and the Finra 2010 rule.
Further, between September 2009 and July 2022, Jefferies is inaccurately classified as debit data in the non-meter calculation reserve is borrowed with securities with titles that did not meet the definition of specialized securities in accordance with Article 15C3-3 (A) (6). As a result, the recording of the company to calculate the claim for its reserve and the 135 catering reports deposited by the company based on these calculations were inaccurate.
As a result, Jefferies violated the Law on Exchanging § 17 (A), the Law on Exchange 17A-4 (B) (5) and 17A 5 (A), NASD Rule 3110 and the FINRA 4511 and 2010 rules.
Finally, between September 2009 and July 2022, the Jefferies Supervisory System, including WSPS written procedures (WSPS), was not reasonably designed to achieve compliance with Article 15C3-3 (E) of the Law on Exchange. The company’s system did not have a specific procedure or procedures to verify that borrowed securities secured by non -specialized titles were accurately incorporated into customer and PAB Reserve Formula calculations.
In July 2022, Jefferies modified the WSPs and applied a process to verify that the borrowed titles secured by non -specialized titles are incorporated into the calculations of the client and the PAB Reserve.
As a result, Jefferies violated the NASD 3010 rule and the Finra 3110 and 2010 rules.
In resolving this issue, Finra recognized Jefferies’ excellent collaboration on existence: (1) reported breach of her behavior, including an active meeting with Finra to discuss her shortcomings. (2) He participated in an independent advisor to conduct an analysis covering the entire period of his violation; (3) he corrected his supervisory deficiencies in a timely manner. and (4) provided significant assistance to Finra in her research.
In addition to a fine of $ 1 million, Jefferies agreed to an accusation.