Failure To Develop And Enforce Procedures
The settlement itself is in regards to rule violations that occurred during the Review Period of the 9th of February, 2015, all the way to the 30th of September, 2015. It was found that Lime had managed to overstate its executed trade volumes that it had advertised through Bloomberg LP. This stands in violation of FINRA Rules 2010 and 5210.
Alongside this, Lime had failed to establish, enforce, and otherwise maintain a supervisory system. Furthermore, the brokerage had failed to establish, enforce, and maintain a written procedure that was reasonably designed in order to comply with regulatory compliance, particularly FINRA Rule 5210. This Rule governs the accuracy of trading volumes advertised by exchanges. Through doing so, Lime has further violated FINRA Rules 2010 and 3110
The Violation In Question
Back in early 215, Lime had started to advertise its executed trade volumes on Bloomberg, giving the task to a registered representative (RR) at Lime to do so. During this Review Period, this RR was entirely responsible for collecting and submitting the relevant data to Bloomberg in order to advertise the executed trade volume of Lime. In February and August of 2015, however, this RR had inadvertently collected trade volume data that was not attributable to Lime, submitting it to Bloomberg for advertising.
In particular, the data that the RR had submitted overstated the executed trade volume of Lime. It did this by including the “Access Only” order flow. This order flow was attributed to other broker-dealers that simply used Lime as a technology vendor instead of a broker-dealer. For these transactions, Lime never executed or even routed that overflow, meaning Lime should not have advertised these volumes as part of its executed trade volume.
4,280 Instances Of False Advertising
During the months of February 2015 and August 2015, the total number of inaccurately advertised instances of Lime’s executed trade volume stood at 4,280 instances. These instances all overstated the trade volume by an incredible 186,818,546 shares. Alongside this, Lime had inadvertently submitted a duplicate trade volume for Bloomberg regarding one symbol, on the 12th of August, 2015
The advertising on Bloomberg had ceased on the 30th of September, 2015. This occurred due to FINRA inquiring about its trade volume advertisements, in turn.