BATS BZX EXCHANGE, INC. LEITER OF ACCEPTANCE, WAIVER AND CONSENT

Transcription

1 BATS BZX EXCHANGE, INC. LEITER OF ACCEPTANCE, WAIVER AND CONSENT NO. ~~~~~~- TO: RE: Bats BZX Exchange, Inc. c/o Department of Market Regulation _ Financial Industry Rcgulntory Authority ("FINRA") Essex Rndez LLC, Respondent Broker-Dealer CRD No Pursuant to Rule 8.3 of the Rules of Bats BZX Exchange, Inc. ("BZX"), Essex Radez LLC (the 61 finn") submits this Letter of Acceptance, Waiver and Consent ("A WC") for the purpose of proposing a settlement of the alleged rule violations described below. TI1is A WC is submitted on the condition that, if accepted, BZX will not bring any future actions against the firm alleging violations based on the same factual findings described herein. I. ACCEPTANCE AND CONSENT A. The firm hereby accepts and consents, without admitting or denying the findings, and solely for the purposes of this proceeding and any other proceeding brought by or on behalf of BZX, or to which BZX is a party, prior to a hearing and without an adjudication of any issue of law or foci, to the entry of the following findings by BZX: BACKGROUND The finn has been a member of BZX since February 17, 2009, and its registration remains in effect. The firm has no relevant disciplinary history. SUMMARY In connection with Matter No , the Order Audit Trail System ("OATS") team of FfNRA's Department of Market Regulation, on behalf of BZX and several other equity exchanges, reviewed, among other things, trade activity at the finn during the period between May 23, 2013 and October 15, 2013 (the "review period"). STARNn. 20JS0466%6(EDK)

2 FACTS ANO VIOLATIVE CONDUCT I. During the review period, the firm submitted inaccurate information to BZX on upproximutely 3,944,987 instances by entering "Principal" orders as ~Agency" orders; this represented 100% of the finn's ordeni entered into BZX under a certain finn Market Pnrticipanl Identifier ("MPID") during the review period. The foregoing conduct constituted separate 1U1d distinct violations of BZX Rules 11.21, 3.l nnd During the review period, the firm's supervisory system and written supervisory procedures ("WSPs") did not provide for supervision reasonably designed to ensure compliance with certain npplicable securities laws and regulations, BZX rules and federal rules and regulations, including with respect to submission of accurate capacity codes on orders submitted to BZX. The foregoing conduct violated BZX Rules 5. 1, 3. 1 and 3.2. B. The finn also consents to the imposition of the fo11owing sanctions: A censure, u fine of$57,500, and an undertaking to revise the firm's WSPs with respect lo tho areas described in pnmgraph l.a.2. Within 30 business days of ncccplanco of this AWC by BZX, a registered principal of the firm shall submit to the COMPLIANCE ASSISTANT, LEGAL SECTION, MARKET REGULATION DEPARTMENT, 9509 KEY WEST AVENUE, ROCKVILLE, MD 20850, a signed dated letter, or an from a work-related account of the registered principal to MruicctRegulntionComp@finro.org, providing the following information: ( l) a reference to th is matter; (2) a representation that the firm has revised its WSPs_to address the deficiencies described in paragraph l.a.2; and (3) the date the revised procedures were implemented. The firm agrees to pay the monetory sanction(s) upon notice that this AWC has been accepted and that such payment(s) are due and payable. It has submitted an Election of Payment fonn showing the method by which it proposes to pay the fine imposed. The firm specifically and voluntarily waives any right to claim that it is unable to pay, now or at any time hereafter, the monetary sanction(s) imposed in this matter. The sanctions imposed herein shall be effective on a date set by BZX. :)"f Ak No, 101S<>l66966 (EOK)

3 If. WAIVER OF PROCEDURAL RIGHTS The firm specifically and voluntnrily waives the following rights granted under BZX Rules: A. To have a Statement of Charges issued specifying the allegations against the firm; B. To be notified of the Statement of Charges and have the opportunity to answer the nllegations in writing; C. To defend against U1e allegations in a disciplinary hearing before a Hearing Panel, to have 11 written record of the hearing made and to have a written decision issued; and D. To appeal any such decision to the Appeals Committee of the BZX s Board of Directora and then to the U.S. Securities and Exchange Commission and a U.S. Court of Appeals. Further, the firm specifically and voluntarily waives any right to claim bins or prejudgment of the Chief Regulatory Officer (''CROn), in connection with her participation in discussions regarding the terms nnd conditions of this A WC, or other consideration of this A WC, including acceptance or rejection of this AWC. The linn fi.jrther specifically and voluntarily waives any right to claim that a person violated the ex parte prohibitions of BZX Rule 8.16, in connection with such person's or body's participation in discussions regarding the tcnns and conditions of this AWC, or other consideration of this A WC, including its acceptance or rejection. The finn understands that: Ill. OTHER MATTERS A Submission of this AWC is voluntary and will not resolve this matter unless and until it has been reviewed and accepted by the CRO, pursuant to BZX Rule 8.3; B. lf this A WC is not accepted, its submission will not be used as evidence to prove any of the allegations against the fim1; and C. If accepted: l. This AWC will become part of the firm's pennanent disciplinary record and may be considered in any future actions brought by BZX or any other STAR No (t:OK)

4 regulator against the finn; 2. This AWC will be published on a website maintained by BZX in nccord1111ce with BZX Ruic 8.11, Interpretations a11d Policies.OJ. In addition, this A WC will be made available through FINRA 's public disclosure program in response to public inquiries about the finn's disciplinary record; and 3. The finn may not talcc any action or mnke or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any finding in this A WC or create the impression U1at the A WC is without factual basis. Tim finn may not talce any position in any proceeding brought by or on behalf of BZX, or to which BZX is a party, that is inconsistent with nny part of this A WC. Nothing in this provision affects the firm's: (i) testimonial obligations; or {ii) right to take legal or factual positions in litigation or other Jegal proceedings in which BZX is not a party. D. The finn may attach a Corrective Action Statement to this A WC that is a slatement of demonstrable corrective steps taken to prevent future misconduct. TI1e finn understands that ii may not deny the charges or make any statement that is inconsistent with the A WC in this Statement. This Statement does not constitute factual or legal findings by BZX, nor docs it reflect the views of BZX or its staff. ST i\r No ( DK)

5 T.bc undersigned, on behalf of the finn, ccrti fies thnt a person duly authorized to act on its behalf has read and understands all of the provisions of this A WC and has been given a full opportunity to ask questions about it.: that it hos ngreed lo the A WC's provisions voluntarily; and that no offer, threat, inducement, or promise of nny kind, other than the tenns set forth herein and the prospect of uvoiding the issuance of a Complaint, has been made to induce the finn to submit it. tv/1 v I Z.c,~ I ~-- Date Reviewed by. Essex Radez LLC Respondent By:_/~Gf'M Name: -~~ /j;~p ~ Title: /Vl A,PJ~ }/l.tj;1ur_, Couns I for e ondent Gregory R. Rich, Esq. Principal RLITTECLLC 141 W. Jackson Boulevunl Suite 2285 Chicago, IL Datu [)/Jj!JJC/l]g~- - _ 6NifJ11(tl/llAJI Tamara Schad an &/8il// fv Chief Regulatory fficer BATS Global Markets, Inc. STAI{ No, 201S04669bO( EO/{)

6 ELECTION OF PAYMENT FORM The firm intends to pay the fine propcsed in the attached Letter of Acceptance, Waiver and Consent by the following method (check one): ~ A Cinn check or bank check for the full amount; or 0 Wire transfet'. Respecttully submitted, Respondent Eeeex Radez LLC STAR Nn. 201.' (EDK)