The Financial Industry Regulatory Authority recently took disciplinary action against G1 Execution Services, LLC, a Chicago brokerage firm, for alleged deficiencies in the process of executing customer orders.
The findings pertained to orders from the firm’s clients on behalf of their customers for over-the counter securities. In its Letter of Acceptance, Waiver and Consent (AWC), FINRA stated that G1 Execution did not provide the best execution of these orders “by failing to use reasonable diligence to ascertain the best market for the subject securities and by failing to buy or sell in such a market so that the resultant prices to the customers were as favorable as possible under prevailing market conditions.”
FINRA stated that the manual process used by GI Execution Services for comparing customer orders resulted in the firm at times missing better priced messages and not executing orders at the best available price. Another finding concluded that the firm did not make reasonable efforts to execute against the market makers quotation within 30 seconds following receipt of a customer’s order, resulting in orders not being handled properly.
In addition, the authority found there were shortcomings in the firm’s supervisory system. According to FINRA, the system did not account for price opportunities available through its electronic messaging service. With reviews of those prices excluded, “it had no way to determine if its customer orders received an inferior execution to one available via the messages.”
Under the terms of the AWC, G1 Execution Services was censured and fined $575,000. It was also ordered to pay $816,618.75, plus interest, in restitution to its customers. The company did not admit or deny the charges, but consented to the sanctions and the entry of FINRA’s findings.
Hyman Cotter PC represents financial professionals, financial institutions and investors in investment loss, employment and disclosure matters, and in regulatory investigations. Contact us by phone at 312-291-4600 or through our online contact form for a free consultation.
