COBRA TRADING, INC.COBRA TRADING, INC. CRD# 132078 SEC# 8-66548 Main Office Location 3008 E HEBRON...
Transcript of COBRA TRADING, INC.COBRA TRADING, INC. CRD# 132078 SEC# 8-66548 Main Office Location 3008 E HEBRON...
BrokerCheck Report
COBRA TRADING, INC.
Section Title
Report Summary
Firm History
CRD# 132078
1
5
Firm Profile 2 - 4
Page(s)
Firm Operations 6 - 13
Disclosure Events 14
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COBRA TRADING, INC.
CRD# 132078
SEC# 8-66548
Main Office Location
3008 E HEBRON PKWYBLDG 400CARROLLTON, TX 75010Regulated by FINRA Dallas Office
Mailing Address
3008 E HEBRON PKWYBLDG 400CARROLLTON, TX 75010
Business Telephone Number
(972) 491-7999
Report Summary for this Firm
This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.
Disclosure Events
Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.
Are there events disclosed about this firm? Yes
The following types of disclosures have beenreported:
Type Count
Regulatory Event 5
Firm Profile
This firm is classified as a corporation.
This firm was formed in Wisconsin on 05/14/2004.
Its fiscal year ends in December.
Firm History
Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.
Firm Operations
Is this brokerage firm currently suspended with anyregulator? No
This firm conducts 3 types of businesses.
This firm is not affiliated with any financial orinvestment institutions.
This firm has referral or financial arrangements withother brokers or dealers.
This firm is registered with:
• the SEC• 1 Self-Regulatory Organization• 52 U.S. states and territories
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This firm is classified as a corporation.
This firm was formed in Wisconsin on 05/14/2004.
CRD#
This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.
Firm Profile
Firm Names and Locations
Its fiscal year ends in December.
COBRA TRADING, INC.
SEC#
132078
8-66548
Main Office Location
Mailing Address
Business Telephone Number
Doing business as COBRA TRADING, INC.
(972) 491-7999
Regulated by FINRA Dallas Office
3008 E HEBRON PKWYBLDG 400CARROLLTON, TX 75010
3008 E HEBRON PKWYBLDG 400CARROLLTON, TX 75010
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This section provides information relating to all direct owners and executive officers of the brokerage firm.
Direct Owners and Executive Officers
Firm Profile
Position
Percentage of Ownership
Is this a public reportingcompany?
Position Start Date
Does this owner direct themanagement or policies ofthe firm?
HESSING, CHADD THOMAS
DIRECTOR, PRESIDENT,EXECUTIVE REP., CFO, FINOP, TREASURER, CCO,SECRETARY
75% or more
No
Individual
03/2004
Yes
2668366
Is this a domestic or foreignentity or an individual?
Legal Name & CRD# (if any):
Position
Percentage of Ownership
Is this a public reportingcompany?
Position Start Date
Does this owner direct themanagement or policies ofthe firm?
KAISLER, BRANDON JOSEPH
CHIEF OPERATING OFFICER
Less than 5%
No
Individual
07/2020
Yes
5354274
Is this a domestic or foreignentity or an individual?
Legal Name & CRD# (if any):
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This section provides information relating to any indirect owners of the brokerage firm.
Indirect Owners
Firm Profile
No information reported.
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Firm History
This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.
No information reported.
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Firm Operations
RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.
This firm is currently registered with the SEC, 1 SRO and 52 U.S. states and territories.
SEC Registration Questions
This firm is registered with the SEC as:
A broker-dealer:
A broker-dealer and government securities broker or dealer:
A government securities broker or dealer only:
This firm has ceased activity as a government securities broker or dealer:
Yes
No
No
No
Federal Regulator Status Date Effective
SEC Approved 12/17/2004
Self-Regulatory Organization Status Date Effective
FINRA Approved 12/17/2004
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Firm Operations
Registrations (continued)
U.S. States &Territories
Status Date Effective
Alabama Approved 04/10/2008
Alaska Approved 02/04/2008
Arizona Approved 03/08/2005
Arkansas Approved 01/14/2008
California Approved 01/10/2005
Colorado Approved 01/18/2006
Connecticut Approved 03/28/2008
Delaware Approved 04/03/2008
District of Columbia Approved 03/24/2008
Florida Approved 01/26/2005
Georgia Approved 01/19/2005
Hawaii Approved 05/12/2008
Idaho Approved 01/28/2008
Illinois Approved 03/13/2008
Indiana Approved 03/27/2008
Iowa Approved 09/12/2006
Kansas Approved 04/02/2008
Kentucky Approved 02/14/2008
Louisiana Approved 03/25/2008
Maine Approved 04/07/2008
Maryland Approved 01/15/2008
Massachusetts Approved 06/21/2006
Michigan Approved 03/26/2008
Minnesota Approved 01/11/2005
Mississippi Approved 03/14/2008
Missouri Approved 03/13/2008
Montana Approved 02/04/2008
Nebraska Approved 05/08/2008
Nevada Approved 01/20/2005
New Hampshire Approved 04/11/2008
New Jersey Approved 04/21/2008
New Mexico Approved 02/06/2008
New York Approved 01/10/2005
U.S. States &Territories
Status Date Effective
North Carolina Approved 03/31/2005
North Dakota Approved 03/24/2008
Ohio Approved 04/08/2008
Oklahoma Approved 02/08/2008
Oregon Approved 02/28/2006
Pennsylvania Approved 03/19/2008
Puerto Rico Approved 06/09/2020
Rhode Island Approved 03/24/2008
South Carolina Approved 12/31/2005
South Dakota Approved 03/14/2008
Tennessee Approved 01/22/2008
Texas Approved 02/07/2005
Utah Approved 10/02/2007
Vermont Approved 03/14/2008
Virginia Approved 09/20/2006
Washington Approved 10/03/2005
West Virginia Approved 03/27/2008
Wisconsin Approved 01/03/2005
Wyoming Approved 03/25/2008
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Firm Operations
Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.
This firm currently conducts 3 types of businesses.
Types of Business
Broker or dealer retailing corporate equity securities over-the-counter
Put and call broker or dealer or option writer
Non-exchange member arranging for transactions in listed securities by exchange member
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Firm Operations
Clearing Arrangements
This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).
Introducing Arrangements
This firm does refer or introduce customers to other brokers and dealers.
Name: WEDBUSH SECURITIES INC.
Business Address: 1000 WILSHIRE BLVD. SUITE 900LOS ANGELES, CA 90017-2457
CRD #: 877
Effective Date: 08/20/2012
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH WEDBUSH SECURITIES ("WS") WHEREBYWS WILL ACT AS COBRA'S CLEARING BROKER/DEALER. UNDER THISARRANGEMENT WS WILL PROVIDE EXECUTION SERVICES, MAINTAINCERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACK OFFICE,MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SEC RULES17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
Name: INTERACTIVE BROKERS LLC
Business Address: ONE PICKWICK PLAZA-2ND FL.GREENWICH, CT 06830
CRD #: 36418
Effective Date: 10/13/2011
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH INTERACTIVE BROKERS, LLC ("IB")WHEREBY IB WILL ACT AS COBRA'S CLEARING BROKER/DEALER.UNDER THIS ARRANGEMENT IB WILL PROVIDE EXECUTION SERVICES,MAINTAIN CERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACKOFFICE, MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SECRULES 17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
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Firm Operations
Industry Arrangements
This firm does have books or records maintained by a third party.
This firm does have accounts, funds, or securities maintained by a third party.
Name: WEDBUSH SECURITIES INC.
Business Address: 1000 WILSHIRE BLVD. SUITE 900LOS ANGELES, CA 90017-2457
CRD #: 877
Effective Date: 08/20/2012
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH WEDBUSH SECURITIES ("WS") WHEREBYWS WILL ACT AS COBRA'S CLEARING BROKER/DEALER. UNDER THISARRANGEMENT WS WILL PROVIDE EXECUTION SERVICES, MAINTAINCERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACK OFFICE,MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SEC RULES17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
Name: INTERACTIVE BROKERS LLC
Business Address: ONE PICKWICK PLAZA-2ND FL.GREENWICH, CT 06830
CRD #: 36418
Effective Date: 10/13/2011
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATE D ACLEARING AGREEMENT WITH INTERACTIVE BROKERS LLC ("IB")WHEREBY IB WILL ACT AS COBRA'S CLEARING BROKER/DEALER.UNDER THIS ARRANGEMENT IB WILL PROVIDE EXECUTION SERVICES,MAINTAIN CERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACKOFFICE, MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SECRULES 17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
Name: WEDBUSH SECURITIES INC.
Business Address: 1000 WILSHIRE BLVD. SUITE 900LOS ANGELES, CA 90017-2457
CRD #: 877
Effective Date: 08/20/201210©2021 FINRA. All rights reserved. Report about COBRA TRADING, INC.
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Firm Operations
Industry Arrangements (continued)
This firm does have customer accounts, funds, or securities maintained by a third party.
Effective Date: 08/20/2012
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH WEDBUSH SECURITIES ("WS") WHEREBYWS WILL ACT AS COBRA'S CLEARING BROKER/DEALER. UNDER THISARRANGEMENT WS WILL PROVIDE EXECUTION SERVICES, MAINTAINCERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACK OFFICE,MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SEC RULES17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
Name: INTERACTIVE BROKERS LLC
Business Address: ONE PICKWICK PLAZA-2ND FL.GREENWICH, CT 06830
CRD #: 36418
Effective Date: 10/13/2011
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATE D ACLEARING AGREEMENT WITH INTERACTIVE BROKERS LLC ("IB")WHEREBY IB WILL ACT AS COBRA'S CLEARING BROKER/DEALER.UNDER THIS ARRANGEMENT IB WILL PROVIDE EXECUTION SERVICES,MAINTAIN CERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACKOFFICE, MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SECRULES 17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
Name: WEDBUSH SECURITIES INC.
Business Address: 1000 WILSHIRE BLVD. SUITE 900LOS ANGELES, CA 90017-2457
CRD #: 877
Effective Date: 08/20/2012
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH WEDBUSH SECURITIES ("WS") WHEREBYWS WILL ACT AS COBRA'S CLEARING BROKER/DEALER. UNDER THISARRANGEMENT WS WILL PROVIDE EXECUTION SERVICES, MAINTAINCERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACK OFFICE,MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SEC RULES17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
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Firm Operations
Industry Arrangements (continued)
This firm does not have individuals who control its management or policies through agreement.
This firm does not have individuals who wholly or partly finance the firm's business.
Control Persons/Financing
COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH WEDBUSH SECURITIES ("WS") WHEREBYWS WILL ACT AS COBRA'S CLEARING BROKER/DEALER. UNDER THISARRANGEMENT WS WILL PROVIDE EXECUTION SERVICES, MAINTAINCERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACK OFFICE,MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SEC RULES17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
Name: INTERACTIVE BROKERS LLC
Business Address: ONE PICKWICK PLAZA-2ND FL.GREENWICH, CT 06830
CRD #: 36418
Effective Date: 10/13/2011
Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATE D ACLEARING AGREEMENT WITH INTERACTIVE BROKERS LLC ("IB")WHEREBY IB WILL ACT AS COBRA'S CLEARING BROKER/DEALER.UNDER THIS ARRANGEMENT IB WILL PROVIDE EXECUTION SERVICES,MAINTAIN CERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACKOFFICE, MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SECRULES 17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.
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Firm Operations
Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.
This firm is not, directly or indirectly:
· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.
This firm is not directly or indirectly, controlled by the following:
· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank
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Disclosure Events
All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.
Final On AppealPending
Regulatory Event 0 5 0
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Disclosure Event Details
What you should know about reported disclosure events:
1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.
2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a
particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:
o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.
4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.
§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently
being appealed.§ A "final" event has been concluded and its resolution is not subject to change.
o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,
or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.
§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.
§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.
5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.
Regulatory - Final
This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.
Disclosure 1 of 5
Reporting Source: Regulator
Allegations: MINOR RULE PLAN VIOLATIONS: BETWEEN SEPTEMBER 30, 2005 ANDAPRIL 2, 2018, COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTERITS CHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIES PRINCIPALWITH THE EXCHANGE.
Current Status: Final
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Initiated By: NYSE ARCA, INC.
Principal Sanction(s)/ReliefSought:
Other Sanction(s)/ReliefSought:
Date Initiated: 02/26/2019
Docket/Case Number: 2018059274401
Principal Product Type: No Product
Other Product Type(s):
Allegations: MINOR RULE PLAN VIOLATIONS: BETWEEN SEPTEMBER 30, 2005 ANDAPRIL 2, 2018, COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTERITS CHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIES PRINCIPALWITH THE EXCHANGE.
Resolution Date: 03/05/2019
Resolution:
Other Sanctions Ordered:
Sanction Details: THE FIRM WAS CENSURED AND FINED $3,500. THIS MATTER WILL BECOMEFINAL FIVE BUSINESS DAYS AFTER THE ISSUANCE OF THIS DECISION.THEREFORE, THIS MATTER BECAME FINAL MARCH 5, 2019.
MINOR RULE PLAN VIOLATIONS: BECAUSE THE FINE BEING IMPOSEDEXCEEDS $2,500, SUCH FINE IS REQUIRED TO BE REPORTED BY THE FIRMON THE FORM BD. A FAILURE TO REPORT THE FINE ON THE FORM BDCOULD SUBJECT THE FIRM TO FURTHER DISCIPLINARY ACTION.
Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?
No
Sanctions Ordered: Monetary/Fine $3,500.00
Other
iReporting Source: Firm
Allegations: BETWEEN SEPTEMBER 30, 2005 AND APRIL 2, 2018,COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTER ITSCHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIESPRINCIPAL WITH THE EXCHANGE IN VIOLATION OF NYSE ARCA RULE 11.18(D).
Current Status: Final
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Initiated By: NYSE ARCA
Principal Sanction(s)/ReliefSought:
Civil and Administrative Penalt(ies) /Fine(s)
Other Sanction(s)/ReliefSought:
Date Initiated: 02/26/2019
Docket/Case Number: STAR NO. 20180592744
Principal Product Type: No Product
Other Product Type(s):
BETWEEN SEPTEMBER 30, 2005 AND APRIL 2, 2018,COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTER ITSCHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIESPRINCIPAL WITH THE EXCHANGE IN VIOLATION OF NYSE ARCA RULE 11.18(D).
Resolution Date: 02/26/2019
Resolution:
Other Sanctions Ordered: NOT APPLICABLE.
Sanction Details: NOT APPLICABLE.
Firm Statement THE FIRM CONSENTS TO THE IMPOSITION OF THE FINE FOR MINOR RULEPLAN VIOLATIONS.
Sanctions Ordered: Monetary/Fine $3,500.00
Consent
Disclosure 2 of 5
i
Reporting Source: Regulator
Allegations: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, COBRA TRADING,INC. ("COBRA TRADING" OR "FIRM") CONSENTED TO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT FAILED TO HAVE CONTROLS ANDSUPERVISORY PROCEDURES REASONABLY DESIGNED TO PREVENT THEENTRY OF ORDERS THAT EXCEEDED APPROPRIATE PRE-SET CREDITTHRESHOLDS. THE FINDINGS STATED THAT THE FIRM FAILED TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ERRONEOUS ORDERS BY REJECTINGORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS, ON ANORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY SYSTEMS AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE COMPLIANCE.
Current Status: Final
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Initiated By: NYSE ARCA, INC.
Principal Sanction(s)/ReliefSought:
Other Sanction(s)/ReliefSought:
Date Initiated: 11/01/2018
Docket/Case Number: 2017-10-00061
Principal Product Type: Other
Other Product Type(s): UNSPECIFIED SECURITIES
WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, COBRA TRADING,INC. ("COBRA TRADING" OR "FIRM") CONSENTED TO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT FAILED TO HAVE CONTROLS ANDSUPERVISORY PROCEDURES REASONABLY DESIGNED TO PREVENT THEENTRY OF ORDERS THAT EXCEEDED APPROPRIATE PRE-SET CREDITTHRESHOLDS. THE FINDINGS STATED THAT THE FIRM FAILED TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ERRONEOUS ORDERS BY REJECTINGORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS, ON ANORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY SYSTEMS AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE COMPLIANCE.
Resolution Date: 11/01/2018
Resolution:
Other Sanctions Ordered: UNDERTAKING
Sanction Details: THE FIRM WAS CENSURED AND FINED $20,000.COBRA TRADING SHALL UNDERTAKE TO ADDRESS ANY REMAININGMARKET ACCESS RULE DEFICIENCIES DESCRIBED IN THE DECISION TOENSURE THAT IT HAS IMPLEMENTED CONTROLS AND PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE RULES ANDREGULATIONS CITED HEREIN PERTAINING TO MARKET ACCESSREQUIREMENTS.
Regulator Statement COBRA TRADING VIOLATED: (I) RULE 15C3-5(C)(1)(Í), BY FAILING TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ORDERS THAT EXCEEDED APPROPRIATEPRE-SET CREDIT THRESHOLDS; (II) RULE 15C3-5(C)(1)(II), BY FAILING TOHAVE CONTROLS AND SUPERVISORY PROCEDURES REASONABLYDESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS BYREJECTING ORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS,ON AN ORDER-BY-ORDER BASIS, OR OVER A SHORT PERIOD; AND (III)NYSE ARCA EQUITIES RULES 6.18(B) AND (C), BY FAILING TO ESTABLISHAND MAINTAIN ADEQUATE SUPERVISORY SYSTEMS AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH RULE 15C3-5.
Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?
No
Sanctions Ordered: CensureMonetary/Fine $20,000.00
Decision & Order of Offer of Settlement
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COBRA TRADING VIOLATED: (I) RULE 15C3-5(C)(1)(Í), BY FAILING TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ORDERS THAT EXCEEDED APPROPRIATEPRE-SET CREDIT THRESHOLDS; (II) RULE 15C3-5(C)(1)(II), BY FAILING TOHAVE CONTROLS AND SUPERVISORY PROCEDURES REASONABLYDESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS BYREJECTING ORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS,ON AN ORDER-BY-ORDER BASIS, OR OVER A SHORT PERIOD; AND (III)NYSE ARCA EQUITIES RULES 6.18(B) AND (C), BY FAILING TO ESTABLISHAND MAINTAIN ADEQUATE SUPERVISORY SYSTEMS AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH RULE 15C3-5.
iReporting Source: Firm
Initiated By: NYSE ARCA
Principal Sanction(s)/ReliefSought:
Censure
Other Sanction(s)/ReliefSought:
A FINE IN THE AMOUNT OF $20,000 AND AN UNDERTAKING TO REMEDIATETHE DEFICIENCIES CONCERNING ITS PRE-TRADE CREDIT ANDERRONEOUS ORDER CONTROLS.
Date Initiated: 11/01/2018
Docket/Case Number: 2017-10-00061
Principal Product Type: Equity Listed (Common & Preferred Stock)
Other Product Type(s):
Allegations: THIS MATTER INVOLVES VIOLATIONS OF RULE L5C3-5 UNDER THESECURITIES EXCHANGE ACT OF 1934 (17 CFR §240.15C3-5) ("RULE 15C3-5,"OR THE "MARKET ACCESS RULE") AND NYSE ARCA RULE 11.18.THE VIOLATIONS OF RULE 15C3-5 AROSE OUT OF THE FIRM'S FAILURE TOEXERCISE REASONABLE CONTROL OVER ITS RISK MANAGEMENTCONTROLS; RATHER, THE FIRM RELIED ON THIRD PARTIES FOR THEIMPLEMENTATION OF THOSE CONTROLS, INCLUDING ORDERMANAGEMENT SYSTEM ("OMS") PROVIDERS AND ITS CLEARING FIRM.VIOLATIONS WERE THE FOLLOWING:1.RULE 15C3-5(C)(I)(I) BY FAILING TO ESTABLISH, DOCUMENT, ANDMAINTAIN RISK MANAGEMENT CONTROLS AND SUPERVISORYPROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THEENTRY OF ORDERS THAT EXCEEDED APPROPRIATE PRE-SET CREDITTHRESHOLDS;2.RULE 15C3-5(C)(L)(II) BY FAILING TO ESTABLISH, DOCUMENT, ANDMAINTAIN RISK MANAGEMENT CONTROLS AND SUPERVISORYPROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THEENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEEDAPPROPRIATE PRICE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OROVER A SHORT PERIOD OF TIME; AND3.NYSE ARCA RULE 11.18 (B) AND (C) BY FAILING TO ESTABLISH ANDMAINTAIN ADEQUATE SUPERVISORY SYSTEMS AND WRITTENPROCEDURES THAT WERE REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH RULE 15C3-5.
Current Status: Final
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Resolution Date: 11/01/2018
Resolution:
Other Sanctions Ordered: IN CONNECTION WITH THE UNDERTAKING, THE FIRM AGREES TOUNDERTAKE TO ADDRESS ANY REMAINING MARKET ACCESS RULEDEFICIENCIES DESCRIBED IN THIS OFFER OF SETTLEMENT ANDCONSENT TO ENSURE THAT IT HAS IMPLEMENTED CONTROLS ANDPROCEDURES THAT ARE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE RULES AND REGULATIONS CITED HEREINPERTAINING TO MARKET ACCESS REQUIREMENTS WITHIN 90 DAYS OFACCEPTANCE OF THE OFFER OF SETTLEMENT.
Sanction Details: THIS ITEM IS NOT APPLICABLE.
Firm Statement COBRA TRADING ("COBRA") IS WORKING WITH ITS THIRD-PARTYSOFTWARE PROVIDERS TO ADDRESS ANY NOTED DEFICIENCIES IN THEIRRISK MANAGEMENT CONTROLS. COBRA WILL ALSO WORK TO IMPLEMENTANY NEW RISK CONTROLS ADDED BY THE PROVIDERS. IN ADDITION TOTHE FIRM'S RELIANCE ON THIRD-PARTIES FOR ENFORCEMENT OF THESECONTROLS, COBRA HAS, SINCE THIRD QUARTER 2018, APPLIED ALL RISKCONTROL SETTINGS ON A CASE-BY-CASE BASIS AS ACCOUNTS AREOPENED. COBRA ALSO TESTS AND REVIEWS CONTROLS ON AQUARTERLY BASIS INTERNALLY.
Sanctions Ordered: CensureMonetary/Fine $20,000.00
Acceptance, Waiver & Consent(AWC)
Disclosure 3 of 5
i
Reporting Source: Regulator
Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS ASSHORT. THE FINDINGS STATED THAT THE FIRM ACCEPTED A SHORT SALEORDER IN AN EQUITY SECURITY FROM ANOTHER PERSON, OR EFFECTEDA SHORT SALE IN AN EQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUTBORROWING THE SECURITY, OR ENTERING INTO A BONA-FIDEARRANGEMENT TO BORROW THE SECURITY; OR HAVING REASONABLEGROUNDS TO BELIEVE THAT THE SECURITY COULD BE BORROWED SOTHAT IT COULD BE DELIVERED ON THE DATE DELIVERY IS DUE; ANDDOCUMENTING COMPLIANCE WITH SEC RULE 203(B)(1) OF REGULATIONSHO. THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLESECURITIES LAWS AND REGULATIONS CONCERNING THE FIRM'SCOMPLIANCE WITH SEC RULES 200(G) AND 203(B)(1) OF REGULATIONSHO.
Current Status: Final
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Initiated By: FINRA
Principal Sanction(s)/ReliefSought:
Other Sanction(s)/ReliefSought:
Date Initiated: 06/22/2015
Docket/Case Number: 2011028810501
Principal Product Type: No Product
Other Product Type(s):
WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS ASSHORT. THE FINDINGS STATED THAT THE FIRM ACCEPTED A SHORT SALEORDER IN AN EQUITY SECURITY FROM ANOTHER PERSON, OR EFFECTEDA SHORT SALE IN AN EQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUTBORROWING THE SECURITY, OR ENTERING INTO A BONA-FIDEARRANGEMENT TO BORROW THE SECURITY; OR HAVING REASONABLEGROUNDS TO BELIEVE THAT THE SECURITY COULD BE BORROWED SOTHAT IT COULD BE DELIVERED ON THE DATE DELIVERY IS DUE; ANDDOCUMENTING COMPLIANCE WITH SEC RULE 203(B)(1) OF REGULATIONSHO. THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLESECURITIES LAWS AND REGULATIONS CONCERNING THE FIRM'SCOMPLIANCE WITH SEC RULES 200(G) AND 203(B)(1) OF REGULATIONSHO.
Resolution Date: 06/22/2015
Resolution:
Other Sanctions Ordered: UNDERTAKING: REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES.
Sanction Details: THE FIRM WAS CENSURED, FINED $32,500, AND UNDERTAKES TO REVISEITS WRITTEN SUPERVISORY PROCEDURES. FINE PAID IN FULL JULY 15,2015.
Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?
No
Sanctions Ordered: CensureMonetary/Fine $32,500.00
Acceptance, Waiver & Consent(AWC)
iReporting Source: Firm
Allegations: IN CONNECTION WITH MATTER NO. 20110288105 AND 20130358426, THESHORT SALES TEAM OF THE DEPARTMENT OF MARKET REGULATION (THE "STAFF") REVIEWED THE FIRM'S COMPLIANCE WITH SEC RULES 200(G)AND 203(B)(1) OF REGULATION SHO DURING THE PERIOD FROM MARCH14, 2011 THROUGH NOVEMBER 1, 2011, AND FEBRUARY 5, 2013.
IN CONNECTION WITH MATTER NO. 20110288105:
1. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 2,139 SHORTSALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT.THE CONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATEAND DISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.
2. DURING THE PERIOD REVIEWED, THE FIRM, ON 2,137 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.
IN CONNECTION WITH MATTER NO. 20130358426:
3. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 16 SHORT SALEORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT. THECONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.
4. DURING THE PERIOD REVIEWED, THE FIRM, ON 16 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.
IN CONNECTION WITH STAR NOS. 20110288105 AND 20130358426:
5. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONSCONCERNING THE FIRM'S COMPLIANCE WITH SEC RULES 200(G) AND200(B)(1) OF REGULATION SHO. SPECIFICALLY, THE FIRM'S SUPERVISORYSYSTEM DID NOT INCLUDE WRITTEN SUPERVISORY PROCEDURESPROVIDING FOR: (1) THE IDENTIFICATION OF THE PERSON(S)RESPONSIBLE FOR SUPERVISION WITH RESPECT TO THE APPLICABLERULES; (2) A STATEMENT OF THE SUPERVISORY STEP(S) TO BE TAKEN BYTHE IDENTIFIED PERSON(S); (3) A STATEMENT AS TO HOW OFTEN SUCHPERSON(S) SHOULD TAKE SUCH STEP(S); AND (4) A STATEMENT AS TOHOW THE COMPLETION OF THE STEP(S) INCLUDED IN THE WRITTENSUPERVISORY PROCEDURES SHOULD BE DOCUMENTED. THE CONDUCTDESCRIBED IN THIS PARAGRAPH CONSTITUTES A VIOLATION OF NASDRULE 3010 AND FINRA RULE 2010.
Current Status: Final
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IN CONNECTION WITH MATTER NO. 20110288105 AND 20130358426, THESHORT SALES TEAM OF THE DEPARTMENT OF MARKET REGULATION (THE "STAFF") REVIEWED THE FIRM'S COMPLIANCE WITH SEC RULES 200(G)AND 203(B)(1) OF REGULATION SHO DURING THE PERIOD FROM MARCH14, 2011 THROUGH NOVEMBER 1, 2011, AND FEBRUARY 5, 2013.
IN CONNECTION WITH MATTER NO. 20110288105:
1. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 2,139 SHORTSALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT.THE CONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATEAND DISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.
2. DURING THE PERIOD REVIEWED, THE FIRM, ON 2,137 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.
IN CONNECTION WITH MATTER NO. 20130358426:
3. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 16 SHORT SALEORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT. THECONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.
4. DURING THE PERIOD REVIEWED, THE FIRM, ON 16 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.
IN CONNECTION WITH STAR NOS. 20110288105 AND 20130358426:
5. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONSCONCERNING THE FIRM'S COMPLIANCE WITH SEC RULES 200(G) AND200(B)(1) OF REGULATION SHO. SPECIFICALLY, THE FIRM'S SUPERVISORYSYSTEM DID NOT INCLUDE WRITTEN SUPERVISORY PROCEDURESPROVIDING FOR: (1) THE IDENTIFICATION OF THE PERSON(S)RESPONSIBLE FOR SUPERVISION WITH RESPECT TO THE APPLICABLERULES; (2) A STATEMENT OF THE SUPERVISORY STEP(S) TO BE TAKEN BYTHE IDENTIFIED PERSON(S); (3) A STATEMENT AS TO HOW OFTEN SUCHPERSON(S) SHOULD TAKE SUCH STEP(S); AND (4) A STATEMENT AS TOHOW THE COMPLETION OF THE STEP(S) INCLUDED IN THE WRITTENSUPERVISORY PROCEDURES SHOULD BE DOCUMENTED. THE CONDUCTDESCRIBED IN THIS PARAGRAPH CONSTITUTES A VIOLATION OF NASDRULE 3010 AND FINRA RULE 2010.
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Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)
Principal Sanction(s)/ReliefSought:
Censure
Other Sanction(s)/ReliefSought:
PAY MONETARY FINE IN THE AMOUNT OF $32,500 AND CERTAINUNDERTAKINGS PURSUANT TO THE ORDER.
Date Initiated: 06/22/2015
Docket/Case Number: CASE NO. 2011028810501
Principal Product Type: Equity Listed (Common & Preferred Stock)
Other Product Type(s):
IN CONNECTION WITH MATTER NO. 20110288105 AND 20130358426, THESHORT SALES TEAM OF THE DEPARTMENT OF MARKET REGULATION (THE "STAFF") REVIEWED THE FIRM'S COMPLIANCE WITH SEC RULES 200(G)AND 203(B)(1) OF REGULATION SHO DURING THE PERIOD FROM MARCH14, 2011 THROUGH NOVEMBER 1, 2011, AND FEBRUARY 5, 2013.
IN CONNECTION WITH MATTER NO. 20110288105:
1. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 2,139 SHORTSALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT.THE CONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATEAND DISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.
2. DURING THE PERIOD REVIEWED, THE FIRM, ON 2,137 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.
IN CONNECTION WITH MATTER NO. 20130358426:
3. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 16 SHORT SALEORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT. THECONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.
4. DURING THE PERIOD REVIEWED, THE FIRM, ON 16 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.
IN CONNECTION WITH STAR NOS. 20110288105 AND 20130358426:
5. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONSCONCERNING THE FIRM'S COMPLIANCE WITH SEC RULES 200(G) AND200(B)(1) OF REGULATION SHO. SPECIFICALLY, THE FIRM'S SUPERVISORYSYSTEM DID NOT INCLUDE WRITTEN SUPERVISORY PROCEDURESPROVIDING FOR: (1) THE IDENTIFICATION OF THE PERSON(S)RESPONSIBLE FOR SUPERVISION WITH RESPECT TO THE APPLICABLERULES; (2) A STATEMENT OF THE SUPERVISORY STEP(S) TO BE TAKEN BYTHE IDENTIFIED PERSON(S); (3) A STATEMENT AS TO HOW OFTEN SUCHPERSON(S) SHOULD TAKE SUCH STEP(S); AND (4) A STATEMENT AS TOHOW THE COMPLETION OF THE STEP(S) INCLUDED IN THE WRITTENSUPERVISORY PROCEDURES SHOULD BE DOCUMENTED. THE CONDUCTDESCRIBED IN THIS PARAGRAPH CONSTITUTES A VIOLATION OF NASDRULE 3010 AND FINRA RULE 2010.
Resolution Date: 06/22/2015
Resolution:
Other Sanctions Ordered: PURSUANT TO CERTAIN PROVISIONS, THE FIRM WILL REVISE ITSSUPERVISORY PROCEDURES TO ADDRESS THE DEFICIENCIESDESCRIBED IN THE ORDER'S FINDINGS, AND PROVIDE FINRA THE DATE OFIMPLEMENTATION.
Sanction Details: FIRM PAID MONETARY FINE IN THE AMOUNT OF $32,500 ON 7/9/2015.
Firm Statement WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM ACCEPTSAND CONSENTS TO THE ENTRY OF THIS ORDER. IN ADDITION TO PAYINGTHE MONETARY FINE OF $32,500, THE FIRM HAS MADE AN UNDERTAKINGTO PROVIDE A REPRESENTATION THAT IT HAS REVISED ITS WRITTENSUPERVISORY PROCEDURES PURSUANT TO THE REQUIREMENTS OF THEORDER AND WILL PROVIDE THE DATE THE PROCEDURES WEREIMPLEMENTED. SUCH INFORMATION SHALL BE SUBMITTED WITHIN 30DAYS OF THE DATE OF THE ACCEPTANCE, WAIVER CONSENT.
Sanctions Ordered: CensureMonetary/Fine $32,500.00
Acceptance, Waiver & Consent(AWC)
Disclosure 4 of 5
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Disclosure 4 of 5
Reporting Source: Regulator
Initiated By: FINRA
Principal Sanction(s)/ReliefSought:
Other
Other Sanction(s)/ReliefSought:
N/A
Date Initiated: 02/17/2015
Docket/Case Number: 2013035340001
Principal Product Type: No Product
Other Product Type(s):
Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOADEQUATELY IMPLEMENT ANTI-MONEY LAUNDERING (AML) POLICIES ANDPROCEDURES REASONABLY EXPECTED TO DETECT AND CAUSE THEREPORTING OF SUSPICIOUS TRANSACTIONS. THE FINDINGS STATED THATTHE FIRM FAILED TO IDENTIFY AND CONDUCT FURTHER DUE DILIGENCEON THE POTENTIALLY SUSPICIOUS ACTIVITY WHILE CONDUCTINGTRANSACTIONAL REVIEWS IN ITS CUSTOMERS' ACCOUNTS. THE FINDINGSALSO STATED THAT THE FIRM FAILED TO IMPLEMENT AN ADEQUATECUSTOMER IDENTIFICATION PROGRAM (CIP) FOR NEW ACCOUNTS. WHENTHE FIRM'S CIP REVIEW REVEALED INCONSISTENT IDENTIFYINGINFORMATION, THE FIRM DID NOT EMPLOY REASONABLE PROCEDURESTO ADDRESS THOSE INCONSISTENCIES TO FORM A REASONABLE BELIEFTHAT IT KNEW THE TRUE IDENTITY OF THE CUSTOMER. THE FINDINGSALSO INCLUDED THAT THE FIRM MOVED CUSTOMER TRANSACTIONS INTOTHE FIRM'S EXEMPT ERROR ACCOUNT SO THAT THE FIRM'S CUSTOMERSCOULD AVOID ADDITIONAL MARGIN ASSESSED BY ITS CLEARING FIRM ONINDIVIDUAL SECURITIES.
Current Status: Final
Resolution Date: 02/17/2015
Resolution:
Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?
No
Sanctions Ordered: CensureMonetary/Fine $150,000.00
Acceptance, Waiver & Consent(AWC)
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Other Sanctions Ordered:
Sanction Details: THE FIRM IS CENSURED AND FINED $150,000. FINE PAID IN FULL ONMARCH 4, 2015.
Sanctions Ordered: CensureMonetary/Fine $150,000.00
iReporting Source: Firm
Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY
Principal Sanction(s)/ReliefSought:
Civil and Administrative Penalt(ies) /Fine(s)
Other Sanction(s)/ReliefSought:
Date Initiated: 12/11/2014
Docket/Case Number: 2013035340001
Principal Product Type: No Product
Other Product Type(s):
Allegations: FROM JANUARY 6, 2009 THROUGH SEPTEMBER 3, 2013 ("RELEVANT TIMEPERIOD"), COBRA HAD VARIOUS FAILURES RELATED TO THEIMPLEMENTATION OF ITS ANTI-MONEY LAUNDERING ("AML")PROCEDURES. MORE SPECIFICALLY, COBRA FAILED TO ADEQUATELY: (1)IMPLEMENT AML POLICIES AND PROCEDURES REASONABLY EXPECTEDTO DETECT AND CAUSE THE REPORTING OF SUSPICIOUS TRANSACTIONS;AND (2) IMPLEMENT AN ADEQUATE CUSTOMER IDENTIFICATION PROGRAM("CIP") FOR NEW ACCOUNTS. IN ADDITION, COBRA MOVED CUSTOMERTRANSACTIONS INTO THE FIRM'S EXEMPT ERROR ACCOUNT SO THAT THEFIRM'S CUSTOMERS COULD AVOID ADDITIONAL MARGIN ASSESSED BYCOBRA'S CLEARING FIRM ON INDIVIDUAL SECURITIES. AS A RESULT OFTHE FOREGOING, COBRA VIOLATED NASD RULE 3011 (FOR THE PERIODBEFORE JANUARY 1, 2010), FINRA RULE 3310 (FOR THE PERIOD ON ORAFTER JANUARY 1, 2010), AND FINRA RULE 2010.
Current Status: Final
Resolution Date: 02/17/2015
Resolution:
Other Sanctions Ordered:
Sanctions Ordered: CensureMonetary/Fine $150,000.00
Acceptance, Waiver & Consent(AWC)
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Other Sanctions Ordered:
Sanction Details: APPLICANT, COBRA TRADING, INC. WAS CENSURED AND FINED $150,000BY FINRA AND PAID SUCH FINE IN FULL ON MARCH 4, 2015.
Firm Statement APPLICANT, COBRA TRADING, INC. SIGNED THE FINAL AWC LETTER DATEDFEBRUARY 17, 2015 AND PAID THE FINE IMPOSED IN THE LETTER.APPLICANT HAS TAKEN CORRECTIVE STEPS TO ADDRESS THE FAILURESCITED IN THE AWC LETTER TO PREVENT RECURRENCE.
Disclosure 5 of 5
i
Reporting Source: Regulator
Initiated By: FINRA
Principal Sanction(s)/ReliefSought:
Other Sanction(s)/ReliefSought:
Date Initiated: 10/17/2011
Docket/Case Number: 2008012205501
Principal Product Type: Equity Listed (Common & Preferred Stock)
Other Product Type(s):
Allegations: SEC RULE 203(B)(1) OF REGULATION SHO - COBRA TRADING, INC., ONNUMEROUS OCCASIONS, ACCEPTED A SHORT SALE ORDER IN AN EQUITYSECURITY FROM ANOTHER PERSON, OR EFFECTED A SHORT SALE IN ANEQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUT BORROWING THESECURITY OR ENTERING INTO A BONA FIDE ARRANGEMENT TO BORROWTHE SECURITY; OR HAVING REASONABLE GROUNDS TO BELIEVE THESECURITY COULD BE BORROWED SO THAT IT COULD BE DELIVERED ONTHE DATE DELIVERY IS DUE; AND DOCUMENTING COMPLIANCE WITH SECRULE 203(B)(1) OF REGULATION SHO.
Current Status: Final
Resolution Date: 10/17/2011
Resolution:
Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?
No
Acceptance, Waiver & Consent(AWC)
26©2021 FINRA. All rights reserved. Report about COBRA TRADING, INC.
www.finra.org/brokercheck User Guidance
Other Sanctions Ordered:
Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $8.500.
Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?
No
Sanctions Ordered: CensureMonetary/Fine $8,500.00
iReporting Source: Firm
Initiated By: FINRA
Principal Sanction(s)/ReliefSought:
Civil and Administrative Penalt(ies) /Fine(s)
Other Sanction(s)/ReliefSought:
Date Initiated: 10/17/2011
Docket/Case Number: 20080122055
Principal Product Type: Equity Listed (Common & Preferred Stock)
Other Product Type(s):
Allegations: SEC RULE 203(B)(1) OF REGULATION SHO - COBRA TRADING, INC., ONNUMEROUS OCCASIONS, ACCEPTED A SHORT SALE ORDER IN AN EQUITYSECURITY FROM ANOTHER PERSON, OR EFFECTED A SHORT SALE IN ANEQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUT BORROWING THESECURITY OR ENTERING INTO A BONA FIDE ARRANGEMENT TO BORROWTHE SECURITY; OR HAVING REASONABLE GROUNDS TO BELIEVE THESECURITY COULD BE BORROWED SO THAT IT COULD BE DELIVERED ONTHE DATE DELIVERY IS DUE; AND DOCUMENTING COMPLIANCE WITH SECRULE 203(B)(1) OF REGULATION SHO.
Current Status: Final
Resolution Date: 10/17/2011
Resolution:
Sanctions Ordered: CensureMonetary/Fine $8,500.00
Acceptance, Waiver & Consent(AWC)
27©2021 FINRA. All rights reserved. Report about COBRA TRADING, INC.
www.finra.org/brokercheck User Guidance
Other Sanctions Ordered:
Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $8.500.
Firm Statement IN RESPONSE TO THE FINRA AWC FINDINGS, COBRA TRADING HASIMMEDIATELY CEASED OBTAINING LOCATES FROM LOCATESTOCK.COM.COBRA TRADING HAD RELIED ON A NOTICE FROM PENSON FINANCIALSTATEMENT THAT THEY HAD ENTERED INTO AN AGREEMENT TO USELOCATESTOCK.COM. WITHOUT NOTICE OF TERMINATION FROM EITHERPENSON FINANCIAL SERVICES OR LOCATESTOCK.COM, COBRA TRADINGCONTINUED TO RELY ON THIS STATEMENT. COBRA TRADING WASVERBALLY TOLD THAT IT DID NOT MATTER IF THEY OBTAINED THELOCATESTOCK.COM LOCATE THROUGH PENSON FINANCIAL OR IF THEYDEALT DIRECTLY WITH THE ONLINE PORTAL PROVIDED BYLOCATESTOCK.COM. COBRA TRADING HAS WRITTEN CONFIRMATION OFLOCATES THAT WERE APPROVED BY PENSON FINANCIAL WHICH THEYRECEIVED FROM LOCATESTOCK.COM. COBRA TRADING WAS UNAWAREOF FINRA'S POSITION ON LOCATES OBTAINED FROM LOCATESTOCK.COMUNTIL THIS FINAL AWC WHICH DID NOT ACKNOWLEDGE THE VALIDITY OFCOBRA TRADINGS PAID BORROWS FROM LOCATESTOCK.COM.IMMEDIATELY, UPON RECEIPT OF THIS REFERENCED AWC, COBRATRADING CEASED ITS USE OF LOCATESTOCK.COM. IT WAS COBRATRADINGS BELIEF THAT THE FIRM HAD OBTAINED A VALID BORROW WITHWRITTEN AND VERBAL STATEMENTS FROM BOTH LOCATESTOCK.COMAND PENSON FINANCIAL SERVICES.
Sanctions Ordered: CensureMonetary/Fine $8,500.00
28©2021 FINRA. All rights reserved. Report about COBRA TRADING, INC.
www.finra.org/brokercheck User Guidance
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29©2021 FINRA. All rights reserved. Report about COBRA TRADING, INC.