Goldman Sachs & Co. LLC agreed to pay a fine of US $2.5 million to resolve charges brought by the Financial Industry Regulatory Authority that, from at least January 2010 through July 2016, it failed to report or accurately report over-the-counter options positions in approximately 21 million instances to the Large Options Position Reporting System hosted by the Options Clearing Corporation. FINRA also claimed that GSCO failed to resubmit a large number of OTC records that were rejected by the LOPR System and violated position limits for OTC options in three different securities. Among other things, on various occasions, GSCO failed to aggregate positions for certain customers; submitted records with various formatting issues; over-reported options positions; and failed to delete from its LOPR report positions with incorrect effective dates, charged FINRA. The majority of GSCO’s fine is payable to FINRA, while the remainder will be payable to Bats BZX Exchange, Inc., NASDAQ ISE, LLC and NASDAQ PHLX LLC.
Compliance Weeds: Generally, FINRA requires members to report or have reported on their behalf any options position in any account or multiple accounts where the firm or any customer, whether alone or in concert, maintains an aggregate position of 200 or more options contracts (whether long or short) of the put class and the call class on the same side of the market for the same underlying security or index. All positions must be reported to the LOPR System by no later than close of business on the business day following the day the transaction or transactions occurred that necessitated the filing. Where aggregate positions meet the 200-contract threshold, the option position of each individual account must be reported. Accounts must be aggregated when they are under common control or acting in concert. Control is presumed for all parties to a joint account who have authority to act on behalf of the account, all general partners of a partnership account, a person or entity that has a 10 percent or more ownership interest in an entity or shares 10 percent or more of an account’s profits and losses, accounts with common directors or management, or an individual or entity that has authority to execute transactions in an account. (Click here to access the May 2016 guidance by FINRA regarding member firms’ LOPR obligations.)