The Financial Industry Regulatory Authority (FINRA) announced yesterday that they fined Deutsche Bank Securities Inc. $6 million for failing to provide complete and accurate trade data in an automated format in a timely manner when requested by FINRA and the Securities and Exchange Commission (SEC). FINRA and the SEC request certain trade data known as “blue sheets” to assist in the investigation of market manipulation and insider trading. Federal securities laws require firms to provide this information to FINRA and the SEC regularly upon request. Blue sheets provide these regulators with detailed information about securities transactions, including the security, trade date, price, share quantity, customer name, and whether it was a buy sale or short sale. This information allows the regulators’ ability to discharge their enforcement and regulatory mandates. Firms must electronically submit these blue sheets when requested without exception.
FINRA found that from at least 2008 until 2015, Deutsche Bank experienced significant failures with its blue sheet systems used to compile and produce blue sheet data, including programming errors in system logic and the firm’s failure to implement enhancements to meet regulatory reporting requirements. This caused the bank to submit thousands of blue sheets to the regulators that misreported or omitted critical information on over one million trades. Also, a significant number of Deutsche Bank’s blue sheet submissions did not meet regulatory deadlines. Firms typically have 10 business days to respond to a blue sheet request. Between January 2014 and August 2015, more than 90 percent of Deutsche Bank’s blue sheets were not submitted to FINRA on a timely basis.