Nomura Securities International, Inc
The findings stated that the firm included accounts of two affiliated foreign broker-dealers in calculations of an aggregation unit's net positions. However, those affiliates lacked self-regulatory oversight and were not subject to Securities and Exchange Commission (SEC) examination. By including those affiliates' accounts in the aggregation unit's net positions, the firm did not accurately calculate those net positions, did not accurately mark some of the aggregation unit's sales as long or short, and did not locate securities for some short sales where required.
The findings also stated that the firm’s supervisory system and written procedures were not reasonably designed to achieve compliance with Rule 200(f) of Regulation SHO and the firm failed to timely remediate known deficiencies. The firm’s supervisory system, including its written procedures, failed to require the exclusion of entities that lack self-regulatory oversight and are not subject to SEC examination from aggregation unit netting.
By at least 2016, the firm became aware that Rule 200(f) did not permit the inclusion of its two affiliated foreign broker-dealers in aggregation unit netting, but the firm failed to take reasonable steps to remedy that problem in a timely manner. Although the firm began working to remove those affiliates' accounts from the aggregation unit in 2016, the work stopped in 2017 and it did not restart that work until FINRA raised the issue with the firm in 2019, and the firm did not complete the work until April 2022.
