The Securities and Exchange Commission (SEC) fined the New York Stock Exchange (NYSE) and two affiliated exchanges $14 million for violations of securities regulations.
The charges stem from regulatory failures and include the first-ever charge for the violation of Regulation SCI. Regulation SCI was adopted by the SEC to strengthen the technology infrastructure and integrity of the U.S. securities markets. Two NYSE exchanges were hit for violating Reg SCI’s business continuity and disaster recovery requirement. The exchanges agreed to pay a $14 million penalty.
The violations also include erroneously implementing a market-wide regulatory halt, misrepresenting stock prices as “automated” despite system issues ahead of a total shutdown of two of the exchanges, and applying price collars during market volatility on Aug. 24, 2015, without a rule to permit them. The latter move resulted in order imbalances being resolved more slowly.
“Exchanges play an important role in protecting investors,” Stephanie Avakian, co-director of the SEC’s Division of Enforcement, said. “For retail investors to have confidence in our markets, exchanges must provide accurate information and comply with legal requirements, including being equipped for unexpected market disruptions.”
The exchanges — NYSE, NYSE Arca, and NYSE American — neither admitted nor denied the findings in the SEC’s order.
“Two NYSE exchanges previously settled rule-filing violations in 2014, and now we’ve found further problems,” Steven Peikin, co-director of the SEC’s Division of Enforcement, said. “NYSE’s violation of the prior SEC order was a significant factor in assessing the civil penalties in this matter.”