Liquidnet, Inc.

Liquidnet, Inc. was fined $250,000 for publishing inaccurate monthly reports of executions of covered orders in National Market System (NMS) securities required under Regulation NMS Rule 605 of the Securities Exchange Act of 1934 (Exchange Act).

The findings stated that the firm erroneously included in its Rule 605 reports approximately 67 million orders that required special handling because the firm incorrectly classified those orders as covered orders, which caused the reports to contain inaccurate order and execution quality statistics.

FINRA identified these inaccuracies during an exam in March 2023. By April 2024, the firm implemented coding fixes for the erroneously classified orders and no longer reported them in the firm’s Rule 605 reports.

The findings also stated that the firm’s supervisory system, including its written supervisory procedures (WSPs), was not reasonably designed to achieve compliance with Rule 605. The firm’s supervisory system was unreasonable because the firm had no procedures and no supervisory process to determine whether orders were properly classified as covered orders. By April 2024, the firm had updated its WSPs and implemented supervisory reviews addressing the proper classification of orders as covered orders