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E*Trade Capital Markets, LLC, Censured and Fined by FINRA

 The following information is from FINRA’s website under “Disciplinary Actions, April, 2012:”

E*Trade Capital Markets LLC (CRD #111528, Chicago, Illinois) 

submitted a Letter of  Acceptance, Waiver and Consent in which the firm was censured, fined $45,000, required to pay $812.13, plus interest, in restitution to customers and to revise its WSPs regarding trade reporting. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that in transactions for or with a customer, it failed to use reasonable diligence to ascertain the best inter-dealer market and failed to buy or sell in such market so that the resultant price to its customer was as favorable as possible under prevailing market conditions.

These findings stated that the firm failed to submit the market on open special handling code to OATS, and in one instance also failed to submit a new order report to OATS; failed to submit OATS information for proprietary orders not related to the firm’s market-making activity; failed to submit route reports; and improperly submitted execution reports to OATS, and in one instance submitted an inaccurate cancellation time. The findings also stated that the firm’s supervisory system for its Dempsey Unit Trading Desk did not provide for supervision reasonably designed to achieve compliance with applicable laws, regulations and FINRA rules concerning trade reporting (reporting trades accurately and timely, and the proper use of trade modifiers). 

These findings also included that the firm failed to provide documentary evidence that on the trade dates reviewed, it performed the supervisory reviews for its market-making desk set forth in its WSPs concerning trading and/or quoting during a trading halt. FINRA found that the firm transmitted trade reports for odd-lot trades and failed to report the transactions with the required odd-lot modifier of .RO to the NASD®/NASDAQ Trade Reporting Facility (NNTRF).

(FINRA Case #2008013636701)


The information from FINRA’s website has ended.
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide.
For a free consultation with an attorney, please call 888-760-6552, or visit our website at:

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E*Trade Gets Wells Notice For Auction-Rate Securities

NEW YORK – In an article from, Brett Philbin writes that  E*Trade Financial Corp. (ETFC)  received a Wells notice from the Financial Industry Regulatory Authority related to the purchase of auction-rate securities by customers of one of its subsidiaries, according to a regulatory filing.  A Wells notice indicates that regulators are recommending enforcement action and gives the company a chance to respond.

Auction-rate securities are long-term debt instruments with attributes of short-term securities because they were resold with new interest rates in periodic auctions. Investors eventually found themselves stuck with the securities after the market froze.

The article states that in its annual report filed with the Securities and Exchange Commission (SEC), the New York online brokerage said its E*Trade Securities, LLC, unit received the notice Feb. 9. E*Trade is the latest online brokerage to face pressure from regulators to make investors whole following the breakdown of the ARS market in 2008.

Philbin writes that last spring, rival TD Ameritrade Holding Corp. (AMTD) agreed to repurchase $305 million in auction-rate securities from clients, while Charles Schwab Corp. (SCHW) received a Wells notice of its own from the SEC as well as a civil complaint from the New York Attorney General in 2009. Schwab filed a motion to dismiss the AG’s case and told Finra it believes the enforcement charges are unwarranted.

 The FoxBusiness article said that in the filing, E*Trade said it is “cooperating with these inquiries and will submit a Wells response to Finra setting forth the bases for E*TRADE Securities’ belief that disciplinary action is not warranted.” The company said the total amount of auction-rate securities held by its customers was $138.2 million as of Dec. 31, 2010.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you feel you have become a victim of  auction-rate securities losses through E*Trade Financial Corporation, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.


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