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FINRA sanctions Houston broker-dealer over flawed OATS audit-trail reporting

Dec 31 2012 Stuart Gittleman, Compliance Complete

The Financial Industry Regulatory Authority has sanctioned Sanders Morris Harris Inc., a Houston-based broker-dealer, for failing to transmit reportable order events, or "ROEs," to OATS, the regulator's order audit-trail system. OATS is an integrated audit trail of order, quote and trade information for Nasdaq and over-the-counter equity securities that FINRA uses to recreate events in the life cycle of orders – receipt and execution or cancellation – to monitor brokerage firms' trading practices. The firms must have systems to electronically capture specific data elements related to handling or executing orders, including the time of each ROE, and report the data to OATS, and must also have written supervisory procedures, or "WSPs," to ensure compliance with this requirement. Without admitting or denying FINRA's findings, the firm on Dec. 24 consented to being censured and fined $40,000 for the OATS violations and $10,000 for supervisory-related breaches. The firm also agreed

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