jefferies llc - finra · 2020-06-30 · this firm was formed in delaware on 03/01/2013. crd# this...

BrokerCheck Report

JEFFERIES LLC

Section Title

Report Summary

Firm History

CRD# 2347

1

8

Firm Profile 2 - 7

Page(s)

Firm Operations 9 - 21

Disclosure Events 22

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JEFFERIES LLC

CRD# 2347

SEC# 8-15074

Main Office Location

520 MADISON AVENUENEW YORK, NY 10022Regulated by FINRA New York Office

Mailing Address

520 MADISON AVENUE16TH FLOORNEW YORK, NY 10022

Business Telephone Number

(212) 284-2300

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 85

Arbitration 4

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in Delaware on 03/01/2013.

Its fiscal year ends in November.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 17 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm does not have referral or financialarrangements with other brokers or dealers.

This firm is registered with:

• the SEC• 24 Self-Regulatory Organizations• 52 U.S. states and territories

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1©2020 FINRA. All rights reserved. Report about JEFFERIES LLC


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This firm is classified as a limited liability company.

This firm was formed in Delaware on 03/01/2013.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in November.

JEFFERIES LLC

SEC#

2347

8-15074

Main Office Location

Mailing Address

Business Telephone Number

Doing business as JEFFERIES LLC

(212) 284-2300

Regulated by FINRA New York Office

520 MADISON AVENUENEW YORK, NY 10022

520 MADISON AVENUE16TH FLOORNEW YORK, NY 10022






This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

JEFFERIES GROUP LLC

SOLE MEMBER

75% or more

Yes

Domestic Entity

02/2013

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


CAGNO, MARK LAWRENCE

MANAGING DIRECTOR/PRINCIPAL OPERATIONS OFFICER

Less than 5%

No

Individual

04/2015

No

2510148



Position


Position Start Date

FORLENZA, PETER CHARLES

SECURITIES TRADER PRINCIPAL

Less than 5%

Individual

03/2019

2366985








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


FRIEDMAN, BRIAN PAUL

DIRECTOR AND CHAIRMAN, EXECUTIVE COMMITTEE

Less than 5%

No

Individual

08/2003

Yes

1298550



Position



Position Start Date


HANDLER, RICHARD BRIAN

CHAIRMAN, CHIEF EXECUTIVE OFFICER AND DIRECTOR

Less than 5%

No

Individual

02/2002

Yes

1563245



LARSON, MATTHEW SCOTT

2605152








Firm Profile

Position



Position Start Date


EXECUTIVE VICE PRESIDENT AND CFO/ PRINCIPAL FINANCIAL OFFICER

Less than 5%

No

Individual

08/2020

Yes

2605152


Position



Position Start Date


SCORAN, LAURI A

CHIEF COMPLIANCE OFFICER, MANAGING DIRECTOR

Less than 5%

No

Individual

03/2012

No

2060170



Position


Position Start Date


SHARP, MICHAEL JAMES

GENERAL COUNSEL, SECRETARY, EXECUTIVE VICE PRESIDENT

Less than 5%

Individual

11/2010

Yes

1013864









Firm Profile



Yes

Position



Position Start Date


STACCONI, JOHN FRANCO

TREASURER

Less than 5%

No

Individual

05/2013

Yes

1814227








This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

JEFFERIES FINANCIAL GROUP INC.

ULTIMATE PARENT COMPANY

JEFFERIES GROUP LLC

75% or more

Yes

Domestic Entity

11/2012

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established









Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

02/28/2013Date of Succession:

This firm was previously:

Predecessor SEC#:

JEFFERIES & COMPANY, INC

8-15074

2347Predecessor CRD#:

Description JEFFERIES & COMPANY, INC. (JEFFCO INC) CONVERTED FROM ADELAWARE (DE) CORP. TO A DE LLC BY CERTIFICATE (NOT MERGER)PURSUANT TO SEC. 18-214 OF THE DE LIMITED LIABILITY COMPANY ACTAND CHANGED ITS NAME TO JEFFERIES LLC (JEFF LLC). JEFF LLCREMAINS THE SAME LEGAL ENTITY. AT THE TIME OF THE CHANGE FROMCORP TO LLC, THERE WERE NO CHANGES IN CONTROL AND THE LLC INEFFECT ASSUMED ALL THE ASSETS AND LIABILITIES OF THEPREDECESSOR CORP (JEFFCO INC) BY OPERATION OF LAW.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 24 SROs and 52 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 09/17/1969

Self-Regulatory Organization Status Date Effective

FINRA Approved 03/01/1963

BOX Exchange LLC Approved 05/07/2012

Cboe BYX Exchange, Inc. Approved 10/19/2010

Cboe BZX Exchange, Inc. Approved 10/23/2008

Cboe C2 Exchange, Inc. Approved 07/18/2012

Cboe EDGA Exchange, Inc. Approved 05/25/2010

Cboe EDGX Exchange, Inc. Approved 05/27/2010

Cboe Exchange, Inc. Approved 07/09/2012

Investors' Exchange LLC Approved 09/21/2017

MEMX LLC Approved 08/24/2020

MIAX Emerald, LLC Approved 03/01/2019

MIAX PEARL, LLC Approved 02/06/2017

Miami International Securities Exchange,LLC

Approved 09/15/2014

NYSE American LLC Approved 05/04/2012

NYSE Arca, Inc. Approved 06/17/1981






NYSE Chicago, Inc. Approved 11/20/2017

NYSE National, Inc. Approved 05/18/2018

Nasdaq BX, Inc. Approved 07/05/2012

Nasdaq GEMX, LLC Approved 10/25/2013

Nasdaq ISE, LLC Approved 03/11/2002

Nasdaq MRX, LLC Approved 02/10/2016

Nasdaq PHLX LLC Approved 05/09/2012

Nasdaq Stock Market Approved 07/12/2006

New York Stock Exchange Approved 11/09/2017





Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 11/09/1982

Alaska Approved 05/14/1985

Arizona Approved 01/05/1982

Arkansas Approved 12/14/1982

California Approved 10/14/1969

Colorado Approved 02/01/1983

Connecticut Approved 06/15/1982

Delaware Approved 10/06/1981

District of Columbia Approved 04/21/1983

Florida Approved 04/27/1983

Georgia Approved 09/21/1981

Hawaii Approved 06/13/1984

Idaho Approved 06/24/1983

Illinois Approved 05/24/1973

Indiana Approved 10/20/1981

Iowa Approved 07/14/1983

Kansas Approved 12/13/1982

Kentucky Approved 07/16/1982

Louisiana Approved 04/20/1983

Maine Approved 02/09/1984

Maryland Approved 05/12/1982

Massachusetts Approved 07/31/1981

Michigan Approved 02/02/1983

Minnesota Approved 08/20/1982

Mississippi Approved 06/29/1983

Missouri Approved 07/18/1983

Montana Approved 05/06/1985

Nebraska Approved 12/01/1981

Nevada Approved 07/15/1983

New Hampshire Approved 02/02/1983

New Jersey Approved 07/13/1983

New Mexico Approved 02/24/1983

New York Approved 01/02/1985

U.S. States &Territories

Status Date Effective

North Carolina Approved 01/03/1983

North Dakota Approved 05/06/1985

Ohio Approved 07/16/1982

Oklahoma Approved 05/08/1985

Oregon Approved 11/03/1982

Pennsylvania Approved 10/19/1982

Puerto Rico Approved 12/11/1995

Rhode Island Approved 05/13/1985

South Carolina Approved 04/08/1983

South Dakota Approved 08/23/1985

Tennessee Approved 04/21/1982

Texas Approved 07/25/1983

Utah Approved 04/21/1983

Vermont Approved 02/13/1984

Virginia Approved 06/01/1982

Washington Approved 04/20/1983

West Virginia Approved 06/22/1982

Wisconsin Approved 01/29/1979

Wyoming Approved 05/20/1985






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.

Non-Securities Business Description: JEFFERIES & COMPANY, INC.'S TECHNOLOGY DEPARTMENT PROVIDESTECHNOLOGY SERVICES TO VARIOUS CORPORATE ENTITIES

This firm currently conducts 17 types of businesses.

Types of Business

Exchange member engaged in exchange commission business other than floor activities

Broker or dealer making inter-dealer markets in corporation securities over-the-counter

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Underwriter or selling group participant (corporate securities other than mutual funds)

Mutual fund retailer

U S. government securities dealer

U S. government securities broker

Municipal securities dealer

Municipal securities broker

Put and call broker or dealer or option writer

Broker or dealer selling securities of non-profit organizations (e.g., churches, hospitals)

Non-exchange member arranging for transactions in listed securities by exchange member

Trading securities for own account

Private placements of securities

Broker or dealer selling interests in mortgages or other receivables

Other - APPLICANT SERVICES CLIENTS WHO TRADE PHYSICAL METALS. SUCH FORMS OF PHYSICALMETALS COULD INCLUDE COINS (E.G., U.S. GOLD EAGLES, SOUTH AFRICAN KRUGGERANDS), METAL BARSOR UNALLOCATED METAL HELD IN INSURED WAREHOUSES.






Firm Operations

Clearing Arrangements

This firm does hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does not refer or introduce customers to other brokers and dealers.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

This firm does not have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing

Name: AUTOMATIC DATA PROCESSING

Business Address: 2 JOURNAL SQUAREJERSEY CITY, NJ 07306

Effective Date: 09/05/1996

Description: BOOKS AND RECORDS REQUIRED PURSUANT TO SEC RULES 17A-3AND 17A-4 ARE MAINTAINED BY THE BROKERAGE SERVICE DIVISIONOF AUTOMATIC DATA PROCESSING ("ADP").

Name: PERSHING LLC

Business Address: ONE PERSHING PLAZAJERSEY CITY, NJ 07399

CRD #: 7560

Effective Date: 03/30/2009

Description: CLEARING BROKER






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

No

Yes

AUSTRALIA

Yes

05/16/2018

GOVERNOR PHILLIP TOWER1 FARRER PLACE,SUITE 54.02, LEVEL 54SYDNEY, AUSTRALIA NSW 2000

JEFFERIES (AUSTRALIA) PTY LTD is under common control with the firm.

JEFFERIES (AUSTRALIA) PTY LTD IS UNDER COMMON CONTROL WITHJEFFERIES LLC.

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

GERMANY

Yes

01/15/2019

BOCKENHEIMER LANDSTR. 2460323FRANKFURT, GERMANY

JEFFERIES GMBH is under common control with the firm.

JEFFERIES GMBH IS A WHOLLY OWNED SUBSIDIARY OF JEFFERIESINTERNATIONAL LIMITED WHICH IS INDIRECTLY OWNED BY JEFFERIESGROUP LLC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations

Organization Affiliates (continued)

Yes

Yes

No

04/02/2012


162264

JEFFERIES FINANCE LLC is under common control with the firm.

JEFFERIES FINANCE LLC WHICH HAS ITS OWN STANDALONEMANAGEMENT, IS INDEPENDENTLY RATED BY NRSROS AND ISSUES ITSOWN DEBT, IS A 50/50 JOINT VENTURE BETWEEN JEFFERIES GROUP LLCAND MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

No

Yes

CANADA

Yes

06/02/2016

161 BAY STREETSUITE 2600TORONTO, CANADA M5J 2S1

JEFFERIES SECURITIES INC. is under common control with the firm.

BOTH JEFFERIES LLC AND JEFFERIES SECURITIES INC. ARE WHOLLYOWNED BY JEFFERIES GROUP LLC

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

03/30/2018


292142

JEFFERIES RESEARCH SERVICES LLC is under common control with the firm.

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


No

Yes

No

BOTH JEFFERIES LLC AND JEFFERIES RESEARCH SERVICES INC. AREWHOLLY OWNED BY JEFFERIES GROUP LLC.

Description:



Country:

Foreign Entity:

Yes

No

No

07/05/2016


284263

M SCIENCE LLC is under common control with the firm.

BOTH M SCIENCE LLC AND JEFFERIES LLC ARE INDIRECTLY OWNED BYJEFFERIES FINANCIAL GROUP INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

06/21/2013


168186

LEUCADIA ASSET MANAGEMENT LLC is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


BOTH LEUCADIA ASSET MANAGEMENT AND JEFFERIES LLC AREINDIRECTLY OWNED BY JEFFERIES FINANCIAL GROUP INC.

Description:


Yes

Yes

CHINA

Yes

01/04/2010

CHEUNG KONG CENTER 22ND FLOOR2 QUEEN'S ROAD CENTRALCENTRAL, HONG KONG, CHINA

JEFFERIES HONG KONG LIMITED is under common control with the firm.

JEFFERIES HONG KONG LIMITED AND JEFFERIES LLC ARE BOTH(INDIRECTLY FOR JEFFERIES HONG KONG LIMITED) WHOLLY OWNED BYJEFFERIES GROUP LLC

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

Yes

SINGAPORE

Yes

03/26/2007

80 RAFFLES PLACE#15-20 UOB PLAZASINGAPORE, SINGAPORE 048624

JEFFERIES SINGAPORE LIMITED is under common control with the firm.

JEFFERIES SINGAPORE LIMITED AND JEFFERIES LLC ARE BOTH(INDIRECTLY FOR JEFFERIES SINGAPORE LIMITED) WHOLLY OWNED BYJEFFERIES GROUP LLC

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

01/14/2009

42/43, 2 NORTH AVENUEMAKER MAXITY BANDRA-KURLA COMPLEXBANDRA (EAST) MUMBAI, INDIA 400 051

JEFFERIES INDIA PRIVATE LIMITED is under common control with the firm.

Effective Date:

Business Address:






Firm Operations


No

Yes

INDIA

Yes

01/14/2009

JEFFERIES INDIA PRIVATE LIMITED AND JEFFERIES LLC ARE BOTH(INDIRECTLY FOR JEFFERIES INDIA PRIVATE LIMITED) WHOLLY OWNED BYJEFFERIES GROUP LLC

Description:



Country:

Foreign Entity:

Effective Date:

Yes

No

No

04/05/2012


161498

JEFFERIES CAPITAL PARTNERS LLC is under common control with the firm.

JEFFERIES GROUP HAS THE RIGHT TO RECEIVE MORE THAN 25% OF THECAPITAL OF JEFFERIES CAPITAL PARTNERS WHICH IS AN AFFILIATE OFJEFFERIES LLC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

UNITED KINGDOM

Yes

07/11/2011

VINTERS PLACE68 UPPER THAMES STREETLONDON, UNITED KINGDOM EC4V 3BJ

LEUCADIA INVESTMENT MANAGEMENT LIMITED is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


Yes

BOTH LEUCADIA INVESTMENT MANAGEMENT LIMITED AND JEFFERIES LLCARE INDIRECTLY WHOLLY OWNED BY JEFFERIES FINANCIAL GROUP INC.

Description:


Yes

No

No

06/18/2002


121767

JEFFERIES INVESTMENT ADVISERS, LLC is under common control with the firm.

JEFFERIES GROUP LLC WHOLLY OWNS AND MANAGES JEFFERIESINVESTMENT ADVISERS, LLC. JEFFERIES GROUP LLC WHOLLY OWNSJEFFERIES LLC

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

No

Yes

JAPAN

Yes

06/20/1996

1-5-1YURAKU-CHOCHIYODA-KUTOKYO, JAPAN 100-0006

JEFFERIES JAPAN LIMITED is under common control with the firm.

JEFFERIES (JAPAN) LIMITED AND JEFFERIES LLC ARE BOTH (INDIRECTLYFOR JEFFERIES (JAPAN) LIMITED) WHOLLY OWNED BY JEFFERIES GROUPLLC

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

VINTERS PLACE68 UPPER THAMES STREETLONDON, ENGLAND EC4V 3BJ

JEFFERIES INTERNATIONAL LIMITED is under common control with the firm.

Business Address:






Firm Operations


No

Yes

UNITED KINGDOM

Yes

03/27/1986

VINTERS PLACE68 UPPER THAMES STREETLONDON, ENGLAND EC4V 3BJ

JEFFERIES INTERNATIONAL LIMITED IS WHOLLY OWNED BY JEFFERIESHOLDINGS II LIMITED WHICH IS IN TURN OWNED BY JEFFERIES HOLDINGSI LIMITED. JEFFERIES HOLDINGS I LIMITED IS WHOLLY OWNED BYJEFFERIES GROUP LLC. JEFFERIES GROUP LLC OWNS JEFFERIES LLC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 85 0

Arbitration N/A 4 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 85

Reporting Source: Firm

Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT IT FAILED TO IMPLEMENT A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES TOMONITOR FOR POTENTIAL LAYERING OR SPOOFING ACTIVITY DURING THEPERIOD OF JANUARY 2014 THROUGH FEBRUARY 2015.

Current Status: Final






Initiated By: NYSE ARCA

Principal Sanction(s)/ReliefSought:

Civil and Administrative Penalt(ies) /Fine(s)

Other Sanction(s)/ReliefSought:

Date Initiated: 12/05/2019

Docket/Case Number: STAR NO.2014043557403

Principal Product Type: Equity Listed (Common & Preferred Stock)

Other Product Type(s):


Resolution Date: 01/09/2020

Resolution:

Other Sanctions Ordered:

Sanction Details: FINE PAID 01/22/2020

Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT JEFEX FAILED TO IMPLEMENT A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES TOMONITOR FOR POTENTIALLY MANIPULATIVE LAYERING OR SPOOFINGACTIVITY BY ITS DIRECT MARKET ACCESS CUSTOMERS DURING THEPERIOD OF JANUARY 2014 THROUGH FEBRUARY 2015.

Sanctions Ordered: CensureMonetary/Fine $27,000.00

Acceptance, Waiver & Consent(AWC)

Disclosure 2 of 85

i


Initiated By: FINRA








Initiated By: FINRA









Resolution:



Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT JEFFERIES EXECUTION SERVICES, INC. FAILED TOIMPLEMENT A REASONABLY DESIGNED SUPERVISORY SYSTEM ANDWRITTEN SUPERVISORY PROCEDURES TO MONITOR FOR POTENTIALLAYERING OR SPOOFING ACTIVITY BY ITS DIRECT MARKET ACCESSCUSTOMERS DURING THE PERIOD OF JANUARY 2014 THROUGHFEBRUARY 2015.



Disclosure 3 of 85

i


Initiated By: NASDAQ


Docket/Case Number: 2014043557405














Resolution:


Sanction Details: PAID 2/12/20




Disclosure 4 of 85

i


Initiated By: NYSE AMERICAN


















Resolution:



Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT JEFFERIES EXECUTION SERVICES INC.FAILED TOIMPLEMENT A REASONABLY DESIGNED SUPERVISORY SYSTEM ANDWRITTEN SUPERVISORY PROCEDURES TO MONITOR FOR POTENTIALLAYERING OR SPOOFING ACTIVITY BY ITS DIRECT MARKET ACCESSCUSTOMERS DURING THE PERIOD OF JANUARY 2014 THROUGHFEBRUARY 2015.



Disclosure 5 of 85

i


Initiated By: NYSE








Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT IT FAILED TO IMPLEMENT A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES TOMONITOR FOR POTENTIAL MANIPULATIVE LAYERING OR SPOOFINGACTIVITY DURING THE PERIOD OF JANUARY 2014 THROUGH FEBRUARY2015.









Resolution:




Sanctions Ordered: Monetary/Fine $18,800.00


Disclosure 6 of 85

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Initiated By: NASDAQ BX








Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT IT FAILED TO IMPLEMENT A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES TOMONITOR FOR POTENTIAL LAYERING OR SPOOFING ACTIVITY DURINGTHE PERIOD OF JANUARY 2014 THROUGH FEBRUARY 2015.



Resolution: Acceptance, Waiver & Consent(AWC)










Disclosure 7 of 85

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Initiated By: NASDAQ PHLX











Resolution:












Disclosure 8 of 85

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Reporting Source: Regulator

Initiated By: CBOE BYX EXCHANGE, INC.





Docket/Case Number: STAR NO. 20140435574 / FILE NO. USRI-6734



Allegations: JEFFERIES EXECUTION SERVICES, INC., N/K/A JEFFERIES LLC FAILED TOSUPERVISE ITS CLIENTS' DIRECT MARKET ACCESS ACTIVITY FORPOTENTIAL LAYERING OR SPOOFING ACTIVITY.

VIOLATION OF BYX RULES 3.1 AND 5.1.

SANCTION: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF$18,800.



Resolution:

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Consent







Sanction Details: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $18,800


iReporting Source: Firm

Initiated By: CBOE BYX EXCHANGE, INC





Docket/Case Number: STAR NO.20140435574/ FILE NO. USRI-6734



Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT IT FAILED TO IMPLEMENT A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES TOMONITOR FOR POTENTIALLY LAYERING OR SPOOFING ACTIVITY DURINGTHE PERIOD OF JANUARY 2014 THROUGH FEBRUARY 2015.



Resolution:



Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT JEFFERIES EXECUTION SERVICES, INC. FAILED TOIMPLEMENT A REASONABLY DESIGNED SUPERVISORY SYSTEM ANDWRITTEN SUPERVISORY PROCEDURES TO MONITOR FOR POTENTIALLYLAYERING OR SPOOFING ACTIVITY BY ITS DIRECT MARKET ACCESSCUSTOMERS DURING THE PERIOD OF JANUARY 2014 THROUGHFEBRUARY 2015.


Consent






Disclosure 9 of 85

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Initiated By: CBOE EDGX EXCHANGE, INC.








Allegations: JEFFERIES EXECUTION SERVICES INC., N/K/A JEFFERIES LLC FAILED TOSUPERVISE ITS CLIENTS' DIRECT MARKET ACCESS ACTIVITY FORPOTENTIAL LAYERING OR SPOOFING ACTIVITY.

VIOLATION OF EDGX RULES 3.1 AND 5.1.




Resolution:




No


Consent

iReporting Source:







Initiated By: CBOE EDGX EXCHANGE, INC








Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT IT FAILED TO IMPLEMENT A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES TOMONITOR FOR POTENTIALLY LAYERING OR SPOOFING ACTIVITY DURINGTHE PERIOD OF JANUARY 2014 THROUGH FEBRUARY 2015.



Resolution:


Sanction Details: CENSURE AND MONETARY FINE IN THE AMOUNT OF $18,800.00

Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT JEFFERIES EXECUTION SERVICES INC. FAILED TOIMPLEMENT A REASONABLY DESIGNED SUPERVISORY SYSTEM ANDWRITTEN SUPERVISORY PROCEDURES TO MONITOR FOR POTENTIALLYLAYERING OR SPOOFING ACTIVITY BY ITS DIRECT MARKET ACCESSCUSTOMERS DURING THE PERIOD OF JANUARY 2014 THROUGHFEBRUARY 2015.


Consent

Disclosure 10 of 85

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VIOLATION OF BZX RULES 3.1 AND 5.1.








Initiated By: CBOE BZX EXCHANGE, INC.









VIOLATION OF BZX RULES 3.1 AND 5.1.



Resolution:




No


Consent


Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT J-IT FAILED TO IMPLEMENT A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES TOMONITOR FOR POTENTIAL LAYERING OR SPOOFING ACTIVITY DURING THEPERIOD OF JANUARY 2014 THROUGH FEBRUARY 2015.







Initiated By: CBOE BZX EXCHANGE, INC.









Resolution:



Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOCHARGES THAT JEFFERIES EXECUTION SERVICES FAILED TO IMPLEMENTA REASONABLY DESIGNED SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES TO MONITOR FOR POTENTIAL LAYERING ORSPOOFING ACTIVITY BY ITS DIRECT MARKET ACCESS CUSTOMERSDURING THE PERIOD OF JANUARY 2014 THROUGH FEBRUARY 2015.


Consent

Disclosure 11 of 85

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Initiated By: CBOE EDGA EXCHANGE, INC.



VIOLATION OF EDGA RULES 3.1 AND 5.1.
















Resolution:




No


Consent


Initiated By: CBOE EDGA EXCHANGE, INC


















Resolution:





Consent

Disclosure 12 of 85

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES LLC("JEFFERIES" OR THE "FIRM") CONSENTED TO THE SANCTIONS AND TOTHE ENTRY OF FINDINGS THAT IT FAILED TO COMPLY WITH ITS DUEDILIGENCE AND BEST EXECUTION OBLIGATIONS WITH RESPECT TO ITSHANDLING OF A CUSTOMER ORDER.

THE FINDINGS STATED THAT THE CUSTOMER CONTACTED THE FIRM'SSALESPERSON ("JEFFERIES SALESPERSON") TO TRADE A TWO-LEGGEDOPTIONS SPREAD ORDER IN XYZ (A GENERIC IDENTIFIER USED IN PLACEOF THE NAME OF THE OPTIONS SERIES). THE SPREAD ORDER WAS TOBUY 9,000 XYZ PUTS AND SELL 8,989 XYZ PUTS (THE "XYZ TRADE."). THEJEFFERIES SALESPERSON CONTACTED A JEFFERIES TRADER("JEFFERIES TRADER") FOR A PRICE QUOTE ON THE XYZ TRADE, TO SEEWHAT PRICE JEFFERIES WAS WILLING TO FACILITATE THE CUSTOMER ONTHE XYZ TRADE. THE JEFFERIES TRADER QUOTED A NET PRICE OF $0.32FOR THE XYZ TRADE ON BEHALF OF JEFFERIES, TO THE JEFFERIESSALESPERSON. THE JEFFERIES SALESPERSON DID NOT RELAY THEPRICE OF $0.32 TO THE CUSTOMER BUT INSTEAD QUOTED THECUSTOMER A PRICE OF $0.33, TO WHICH THE CUSTOMER AGREED. THE$0.33 NET PRICE WAS WORSE FOR THE CUSTOMER AND BETTER FORJEFFERIES THAN THE $0.32 QUOTED TO THE JEFFERIES SALESPERSONBY THE JEFFERIES TRADER. THE CUSTOMER AGREED TO TRADE AT A NETPRICE OF $0.33, UNAWARE OF THE BETTER $0.32 QUOTED BY THEJEFFERIES TRADER. THE XYZ TRADE WAS EXECUTED AT A NET PRICE OF$0.33, RESULTING IN HARM TO THE CUSTOMER IN THE AMOUNT OF $9,000.PURSUANT TO THE CUSTOMER'S AGREEMENT WITH JEFFERIES, THECUSTOMER PAID A COMMISSION OF $18,000 FOR THE XYZ TRADE. BYFAILING TO RELAY THE BETTER $0.32 OFFER TO THE CUSTOMER, THEFIRM FAILED TO FULFILL ITS BEST EXECUTION OBLIGATIONS.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO CREATE,MAINTAIN, AND PRESERVE ACCURATE RECORDS OF CANCELLATIONS ORADJUSTMENTS TO CUSTOMER ORDERS AND FAILED TO CREATE,MAINTAIN, AND PRESERVE ACCURATE RECORDS OF ORDER RECEIPT ANDORDER TRANSMISSION TIMES FOR ORDERS MANUALLY ROUTED FOREXECUTION.

FINRA FOUND THAT THE FIRM FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY SYSTEMS AND WRITTEN PROCEDURES THATWERE REASONABLY DESIGNED TO ENSURE COMPLIANCE WITH THEEXCHANGE RULES, FOR ITS BOOKS AND RECORDS OBLIGATIONS.SPECIFICALLY, THE FIRM FAILED TO ESTABLISH AND MAINTAIN ANADEQUATE SUPERVISORY SYSTEM TO ENSURE THE CREATION ANDRETENTION OF ACCURATE RECORDS FOR ITS MANUAL OPTIONS ORDERS.







Initiated By: NYSE ARCA, INC.




Docket/Case Number: 2017-06-00046

Principal Product Type: Options


WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES LLC("JEFFERIES" OR THE "FIRM") CONSENTED TO THE SANCTIONS AND TOTHE ENTRY OF FINDINGS THAT IT FAILED TO COMPLY WITH ITS DUEDILIGENCE AND BEST EXECUTION OBLIGATIONS WITH RESPECT TO ITSHANDLING OF A CUSTOMER ORDER.

THE FINDINGS STATED THAT THE CUSTOMER CONTACTED THE FIRM'SSALESPERSON ("JEFFERIES SALESPERSON") TO TRADE A TWO-LEGGEDOPTIONS SPREAD ORDER IN XYZ (A GENERIC IDENTIFIER USED IN PLACEOF THE NAME OF THE OPTIONS SERIES). THE SPREAD ORDER WAS TOBUY 9,000 XYZ PUTS AND SELL 8,989 XYZ PUTS (THE "XYZ TRADE."). THEJEFFERIES SALESPERSON CONTACTED A JEFFERIES TRADER("JEFFERIES TRADER") FOR A PRICE QUOTE ON THE XYZ TRADE, TO SEEWHAT PRICE JEFFERIES WAS WILLING TO FACILITATE THE CUSTOMER ONTHE XYZ TRADE. THE JEFFERIES TRADER QUOTED A NET PRICE OF $0.32FOR THE XYZ TRADE ON BEHALF OF JEFFERIES, TO THE JEFFERIESSALESPERSON. THE JEFFERIES SALESPERSON DID NOT RELAY THEPRICE OF $0.32 TO THE CUSTOMER BUT INSTEAD QUOTED THECUSTOMER A PRICE OF $0.33, TO WHICH THE CUSTOMER AGREED. THE$0.33 NET PRICE WAS WORSE FOR THE CUSTOMER AND BETTER FORJEFFERIES THAN THE $0.32 QUOTED TO THE JEFFERIES SALESPERSONBY THE JEFFERIES TRADER. THE CUSTOMER AGREED TO TRADE AT A NETPRICE OF $0.33, UNAWARE OF THE BETTER $0.32 QUOTED BY THEJEFFERIES TRADER. THE XYZ TRADE WAS EXECUTED AT A NET PRICE OF$0.33, RESULTING IN HARM TO THE CUSTOMER IN THE AMOUNT OF $9,000.PURSUANT TO THE CUSTOMER'S AGREEMENT WITH JEFFERIES, THECUSTOMER PAID A COMMISSION OF $18,000 FOR THE XYZ TRADE. BYFAILING TO RELAY THE BETTER $0.32 OFFER TO THE CUSTOMER, THEFIRM FAILED TO FULFILL ITS BEST EXECUTION OBLIGATIONS.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO CREATE,MAINTAIN, AND PRESERVE ACCURATE RECORDS OF CANCELLATIONS ORADJUSTMENTS TO CUSTOMER ORDERS AND FAILED TO CREATE,MAINTAIN, AND PRESERVE ACCURATE RECORDS OF ORDER RECEIPT ANDORDER TRANSMISSION TIMES FOR ORDERS MANUALLY ROUTED FOREXECUTION.

FINRA FOUND THAT THE FIRM FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY SYSTEMS AND WRITTEN PROCEDURES THATWERE REASONABLY DESIGNED TO ENSURE COMPLIANCE WITH THEEXCHANGE RULES, FOR ITS BOOKS AND RECORDS OBLIGATIONS.SPECIFICALLY, THE FIRM FAILED TO ESTABLISH AND MAINTAIN ANADEQUATE SUPERVISORY SYSTEM TO ENSURE THE CREATION ANDRETENTION OF ACCURATE RECORDS FOR ITS MANUAL OPTIONS ORDERS.


Resolution:


No







Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED AND FINED $100,000.WITHIN 60 DAYS OF THE EXECUTION OF THE AWC, THE FIRM AGREES TOPROVIDE A CERTIFICATION THAT THE FIRM HAS ADDRESSED THESUPERVISORY DEFICIENCIES DESCRIBED IN THE AWC; AND THE DATE(S)ANY REVISED SUPERVISORY PROCEDURES WERE IMPLEMENTED.

Regulator Statement IN DETERMINING TO RESOLVE THIS MATTER ON THE BASIS SET FORTHHEREIN, ENFORCEMENT TOOK INTO CONSIDERATION THAT THE FIRMOFFERED RESTITUTION TO THE CUSTOMER IN THE AMOUNT OF $9,000.


No



Initiated By: NYSE ARCA




DISGORGEMENT, $9000 BACK TO CLIENT


Docket/Case Number: 2017-06-00046



Allegations: WITHOUT ADMITTING OR DENYING THE ALLEGED VIOLATIONS, THE FIRMEXECUTED A REGULATORY SETTLEMENT WITH NYSE ARCA BASED ONFINDINGS THAT, DURING THE PERIOD OF JANUARY 1, 2017 THROUGHDECEMBER 31, 2018, THE FIRM FAILED TO ADHERE TO BEST EXECUTIONOBLIGATIONS IN CONNECTION WITH A CUSTOMER OPTIONS ORDER,FAILED TO MAINTAIN ACCURATE RECORDS OF ORDER CANCELLATIONAND ORDER RECEIPT AND TRANSMISSION TIMES, AND FAILED TOMAINTAIN ADEQUATE SUPERVISORY SYSTEMS AND PROCEDURESREGARDING THE CONDUCT AT ISSUE.








DISGORGEMENT, $9000 BACK TO CLIENT


Resolution:


Sanction Details: FINE PAID 12/20/19; CLIENT HAS BEEN CONTACTED REGARDINGDISGORGEMENT

Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT ALLEGING THAT THEFIRM FAILED TO ADHERE TO BEST EXECUTION OBLIGATIONS INCONNECTION WITH A CUSTOMER OPTIONS ORDER AND FAILED TOMAINTAIN ACCURATE RECORDS OF ORDER CANCELLATION AND ORDERRECEIPT AND TRANSMISSION TIMES DURING THE PERIOD OF JANUARY 1,2017 THROUGH DECEMBER 31, 2018.

Sanctions Ordered: CensureMonetary/Fine $100,000.00Disgorgement/Restitution


Disclosure 13 of 85

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Initiated By: CBOE EXCHANGE, INC.




DISGORGEMENT IN THE AMOUNT OF $14,243


Docket/Case Number: STAR NO.20180589340/FILE NO.USRI-875



Allegations: FIRM TENDERED SHARES FOR A PARTIAL TENDER OFFER IN EXCESSOF ITS NET LONG POSITION; FINRA FOUND THAT FIRM DID NOTESTABLISH, MAINTAIN,AND ENFORCE ADEQUATE WRITTEN SUPERVISORYPROCEDURES, OR A SYSTEM FOR APPLYING SUCH PROCEDURES.



Resolution: Consent







Other Sanctions Ordered: CENSURE, A MONETARY FINE, DISGORGEMENT

Sanction Details: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $25,000, ANDDISGORGEMENT IN THE AMOUNT OF $14,243. DATE PAID: 11/26/19

Firm Statement FIRM TENDERED SHARES FOR A PARTIAL TENDER OFFER IN EXCESSOF ITS NET LONG POSITION; FINRA FOUND THAT THE FIRM DID NOTESTABLISH, MAINTAIN,AND ENFORCE ADEQUATE WRITTEN SUPERVISORYPROCEDURES,OR A SYSTEM FOR APPLYING SUCH PROCEDURES.


Disclosure 14 of 85

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Allegations: SEC ADMIN RELEASE 34-87680 / DECEMBER 9, 2019:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTEDPURSUANT TO SECTION 15(B)(4) OF THE SECURITIES EXCHANGE ACT OF1934 ("EXCHANGE ACT"), AGAINST JEFFERIES LLC ("JEFFERIES" OR "RESPONDENT").THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OFJEFFERIES' IMPROPER PRACTICES WITH RESPECT TO SECURITIESLENDING TRANSACTIONS INVOLVING PRE-RELEASED AMERICANDEPOSITARY RECEIPTS ("ADRS").ADR FACILITIES, WHICH PROVIDE FOR THE ISSUANCE OF ADRS, AREESTABLISHED BY A DEPOSITARY BANK ("DEPOSITARY") PURSUANT TO ADEPOSIT AGREEMENT ("DEPOSIT AGREEMENT").TYPICALLY, A DEPOSITARY ISSUES ADRS TO A MARKET PARTICIPANT THATCONTEMPORANEOUSLY DELIVERS THE CORRESPONDING NUMBER OFFOREIGN ORDINARY SHARES TO THE DEPOSITARY'S FOREIGNCUSTODIAN ("CUSTODIAN").3 HOWEVER, IN CERTAIN SITUATIONS,DEPOSIT AGREEMENTS MAY PROVIDE FOR "PRE-RELEASE"TRANSACTIONS IN WHICH A MARKET PARTICIPANT CAN OBTAIN NEWLYISSUED ADRS FROM THE DEPOSITARY BEFORE DELIVERING ORDINARYSHARES TO THE CUSTODIAN. ONLY BROKERS (OR OTHER MARKETPARTICIPANTS) THAT HAVE ENTERED INTO PRE-RELEASE AGREEMENTSWITH A DEPOSITARY ("PRE-RELEASE AGREEMENTS") CAN OBTAIN PRE-RELEASED ADRS FROM THE DEPOSITARY. THE PRE-RELEASEAGREEMENTS, CONSISTENT WITH THE DEPOSIT AGREEMENTS, REQUIRETHE BROKER RECEIVING THE PRE-RELEASED ADRS ("PRE-RELEASEBROKER") OR THE COUNTERPARTY ON WHOSE BEHALF THE PRE-RELEASE BROKER IS ACTING ("COUNTERPARTY") TO BENEFICIALLY OWNTHE ORDINARY SHARES REPRESENTED BY THE ADRS, AND TO ASSIGNALL BENEFICIAL RIGHT, TITLE, AND INTEREST IN THOSE ORDINARYSHARES TO THE DEPOSITARY WHILE THE PRE-RELEASE TRANSACTION ISOUTSTANDING. IN EFFECT, THE PRERELEASE BROKER OR ITSCOUNTERPARTY BECOMES THE TEMPORARY CUSTODIAN OF THEORDINARY SHARES THAT WOULD OTHERWISE HAVE BEEN DELIVERED TOTHE CUSTODIAN.FROM AT LEAST APRIL 2012 UNTIL APPROXIMATELY DECEMBER 2014,JEFFERIES RECEIVED PRE-RELEASED ADRS FROM PRE-RELEASEBROKERS THAT HAD BEEN ISSUED BY DEPOSITARIES WHERE NEITHERTHE PRE-RELEASE BROKERS NOR JEFFERIES HAD TAKEN REASONABLESTEPS TO SATISFY THE PRE-RELEASE BROKERS' OBLIGATIONS UNDERTHE PRE-RELEASE AGREEMENTS. JEFFERIES, WHICH WAS NOT A PRE-RELEASE BROKER, UNDERSTOOD THAT THE ADRS THAT JEFFERIESBORROWED FROM PRE-RELEASE BROKERS MAY HAVE BEEN SOURCEDFROM DEPOSITARIES PURSUANT TO PRE-RELEASE AGREEMENTS.JEFFERIES ALSO UNDERSTOOD THE BENEFICIAL OWNERSHIP AND OTHERREPRESENTATIONS THAT PRE-RELEASE BROKERS WERE REQUIRED TOMAKE TO DEPOSITARIES IN ORDER TO OBTAIN PRE-RELEASED ADRS.JEFFERIES ALSO UNDERSTOOD THE CONDUIT NATURE OF PRE-RELEASEBROKERS' SECURITIES LENDING BUSINESSES, WHICH UNDER THECIRCUMSTANCES SHOULD HAVE INDICATED THAT THE PRE-RELEASEBROKERS DID NOT OWN UNDERLYING ORDINARY SHARES.JEFFERIES' ASSOCIATED PERSONS ON ITS SECURITIES LENDING DESK,BY OBTAINING ADRS FROM PRE-RELEASE BROKERS IN CIRCUMSTANCESWHERE THEY SHOULD HAVE KNOWN THAT SUCH ADRS LIKELY HAD BEENPRE-RELEASED WITHOUT COMPLIANCE WITH THE PRE-RELEASEBROKERS' OBLIGATIONS UNDER THE PRE-RELEASE AGREEMENTS,VIOLATED SECTION 17(A)(3) OF THE SECURITIES ACT OF 1933("SECURITIES ACT"). JEFFERIES' SUPERVISORY POLICIES ANDPROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT ANDDETECT VIOLATIONS OF SECTION 17(A)(3) OF THE SECURITIES ACT BYASSOCIATED PERSONS ON JEFFERIES' SECURITIES LENDING DESK. AS ARESULT, JEFFERIES FAILED REASONABLY TO SUPERVISE ITS ASSOCIATEDPERSONS WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THEEXCHANGE ACT.







Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Docket/Case Number: 3-19614

Principal Product Type: Other

SEC ADMIN RELEASE 34-87680 / DECEMBER 9, 2019:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTEDPURSUANT TO SECTION 15(B)(4) OF THE SECURITIES EXCHANGE ACT OF1934 ("EXCHANGE ACT"), AGAINST JEFFERIES LLC ("JEFFERIES" OR "RESPONDENT").THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OFJEFFERIES' IMPROPER PRACTICES WITH RESPECT TO SECURITIESLENDING TRANSACTIONS INVOLVING PRE-RELEASED AMERICANDEPOSITARY RECEIPTS ("ADRS").ADR FACILITIES, WHICH PROVIDE FOR THE ISSUANCE OF ADRS, AREESTABLISHED BY A DEPOSITARY BANK ("DEPOSITARY") PURSUANT TO ADEPOSIT AGREEMENT ("DEPOSIT AGREEMENT").TYPICALLY, A DEPOSITARY ISSUES ADRS TO A MARKET PARTICIPANT THATCONTEMPORANEOUSLY DELIVERS THE CORRESPONDING NUMBER OFFOREIGN ORDINARY SHARES TO THE DEPOSITARY'S FOREIGNCUSTODIAN ("CUSTODIAN").3 HOWEVER, IN CERTAIN SITUATIONS,DEPOSIT AGREEMENTS MAY PROVIDE FOR "PRE-RELEASE"TRANSACTIONS IN WHICH A MARKET PARTICIPANT CAN OBTAIN NEWLYISSUED ADRS FROM THE DEPOSITARY BEFORE DELIVERING ORDINARYSHARES TO THE CUSTODIAN. ONLY BROKERS (OR OTHER MARKETPARTICIPANTS) THAT HAVE ENTERED INTO PRE-RELEASE AGREEMENTSWITH A DEPOSITARY ("PRE-RELEASE AGREEMENTS") CAN OBTAIN PRE-RELEASED ADRS FROM THE DEPOSITARY. THE PRE-RELEASEAGREEMENTS, CONSISTENT WITH THE DEPOSIT AGREEMENTS, REQUIRETHE BROKER RECEIVING THE PRE-RELEASED ADRS ("PRE-RELEASEBROKER") OR THE COUNTERPARTY ON WHOSE BEHALF THE PRE-RELEASE BROKER IS ACTING ("COUNTERPARTY") TO BENEFICIALLY OWNTHE ORDINARY SHARES REPRESENTED BY THE ADRS, AND TO ASSIGNALL BENEFICIAL RIGHT, TITLE, AND INTEREST IN THOSE ORDINARYSHARES TO THE DEPOSITARY WHILE THE PRE-RELEASE TRANSACTION ISOUTSTANDING. IN EFFECT, THE PRERELEASE BROKER OR ITSCOUNTERPARTY BECOMES THE TEMPORARY CUSTODIAN OF THEORDINARY SHARES THAT WOULD OTHERWISE HAVE BEEN DELIVERED TOTHE CUSTODIAN.FROM AT LEAST APRIL 2012 UNTIL APPROXIMATELY DECEMBER 2014,JEFFERIES RECEIVED PRE-RELEASED ADRS FROM PRE-RELEASEBROKERS THAT HAD BEEN ISSUED BY DEPOSITARIES WHERE NEITHERTHE PRE-RELEASE BROKERS NOR JEFFERIES HAD TAKEN REASONABLESTEPS TO SATISFY THE PRE-RELEASE BROKERS' OBLIGATIONS UNDERTHE PRE-RELEASE AGREEMENTS. JEFFERIES, WHICH WAS NOT A PRE-RELEASE BROKER, UNDERSTOOD THAT THE ADRS THAT JEFFERIESBORROWED FROM PRE-RELEASE BROKERS MAY HAVE BEEN SOURCEDFROM DEPOSITARIES PURSUANT TO PRE-RELEASE AGREEMENTS.JEFFERIES ALSO UNDERSTOOD THE BENEFICIAL OWNERSHIP AND OTHERREPRESENTATIONS THAT PRE-RELEASE BROKERS WERE REQUIRED TOMAKE TO DEPOSITARIES IN ORDER TO OBTAIN PRE-RELEASED ADRS.JEFFERIES ALSO UNDERSTOOD THE CONDUIT NATURE OF PRE-RELEASEBROKERS' SECURITIES LENDING BUSINESSES, WHICH UNDER THECIRCUMSTANCES SHOULD HAVE INDICATED THAT THE PRE-RELEASEBROKERS DID NOT OWN UNDERLYING ORDINARY SHARES.JEFFERIES' ASSOCIATED PERSONS ON ITS SECURITIES LENDING DESK,BY OBTAINING ADRS FROM PRE-RELEASE BROKERS IN CIRCUMSTANCESWHERE THEY SHOULD HAVE KNOWN THAT SUCH ADRS LIKELY HAD BEENPRE-RELEASED WITHOUT COMPLIANCE WITH THE PRE-RELEASEBROKERS' OBLIGATIONS UNDER THE PRE-RELEASE AGREEMENTS,VIOLATED SECTION 17(A)(3) OF THE SECURITIES ACT OF 1933("SECURITIES ACT"). JEFFERIES' SUPERVISORY POLICIES ANDPROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT ANDDETECT VIOLATIONS OF SECTION 17(A)(3) OF THE SECURITIES ACT BYASSOCIATED PERSONS ON JEFFERIES' SECURITIES LENDING DESK. AS ARESULT, JEFFERIES FAILED REASONABLY TO SUPERVISE ITS ASSOCIATEDPERSONS WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THEEXCHANGE ACT.







Other


N/A

Other Product Type(s): AMERICAN DEPOSITARY RECEIPTS


Resolution:


Sanction Details: IT WAS ORDERED THAT JEFFERIES LLC IS CENSURED, SHALL PAYDISGORGEMENT OF $2,275,609 AND PREJUDGMENT INTEREST OF $468,346AND PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $1,251,584.95.

Regulator Statement RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")WHICH THE COMMISSION HAS DETERMINED TO ACCEPT.JEFFERIES FAILED REASONABLY TO SUPERVISE ITS ASSOCIATEDPERSONS WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THEEXCHANGE ACT.IT ORDERED THAT JEFFERIES LLC IS CENSURED, SHALL PAYDISGORGEMENT OF $2,275,609 AND PREJUDGMENT INTEREST OF $468,346AND PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $1,251,584.95.


No

Sanctions Ordered: CensureMonetary/Fine $1,251,584.95Disgorgement/Restitution

Order


Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT TO SETTLE CHARGESOF IMPROPERLY HANDLING OF "PRE-RELEASED" AMERICAN DEPOSITARYRECEIPTS (ADRS). JEFFERIES IMPROPERLY BORROWED PRE-RELEASEDADRS FROM OTHER BROKERS WHEN JEFFERIES SHOULD HAVE KNOWNTHAT THOSE BROKERS DID NOT OWN THE FOREIGN SHARES NEEDED TOSUPPORT THOSE ADRS. THE ORDER ALSO FINDS THAT THE FIRM FAILEDREASONABLY TO SUPERVISE ITS SECURITIES LENDING DESK PERSONNELCONCERNING BORROWING PRE-RELEASED ADRS FROM THESEBROKERS.







Initiated By: SECURITIES AND EXCHANGE COMMISSION


Other


N/A




Other Product Type(s): AMERICAN DEPOSITARY RECEIPTS

THE FIRM AGREED TO A REGULATORY SETTLEMENT TO SETTLE CHARGESOF IMPROPERLY HANDLING OF "PRE-RELEASED" AMERICAN DEPOSITARYRECEIPTS (ADRS). JEFFERIES IMPROPERLY BORROWED PRE-RELEASEDADRS FROM OTHER BROKERS WHEN JEFFERIES SHOULD HAVE KNOWNTHAT THOSE BROKERS DID NOT OWN THE FOREIGN SHARES NEEDED TOSUPPORT THOSE ADRS. THE ORDER ALSO FINDS THAT THE FIRM FAILEDREASONABLY TO SUPERVISE ITS SECURITIES LENDING DESK PERSONNELCONCERNING BORROWING PRE-RELEASED ADRS FROM THESEBROKERS.


Resolution:


Sanction Details: CENSURE, DISGORGEMENT OF $2,275,609 AND PREJUDGMENT INTERESTOF $468,346 AND CIVIL MONEY PENALTY IN THE AMOUNT OF $1,251,584.95.

Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT TO SETTLE CHARGESOF IMPROPERLY HANDLING OF "PRE-RELEASED" AMERICAN DEPOSITARYRECEIPTS (ADRS). JEFFERIES IMPROPERLY BORROWED PRE-RELEASEDADRS FROM OTHER BROKERS WHEN JEFFERIES SHOULD HAVE KNOWNTHAT THOSE BROKERS DID NOT OWN THE FOREIGN SHARES NEEDED TOSUPPORT THOSE ADRS. THE ORDER ALSO FINDS THAT THE FIRM FAILEDREASONABLY TO SUPERVISE ITS SECURITIES LENDING DESK PERSONNELCONCERNING BORROWING PRE-RELEASED ADRS FROM THESEBROKERS.


Order

Disclosure 15 of 85

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Allegations: JEFFERIES LLC (I) TENDERED SHARES FOR A PARTIAL TENDER OFFER INEXCESS OF ITS NET LONG POSITION; AND (II) FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE ADEQUATE WRITTEN SUPERVISORYPROCEDURES, AND A SYSTEM FOR APPLYING SUCH PROCEDURES,REASONABLY DESIGNED TO PREVENT AND DETECT VIOLATIONS OFEXCHANGE ACT RULE 14E-4.VIOLATION OF EXCHANGE RULES 4.2 AND 4.24; RULE 14E-4PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDEDSANCTION: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $25,000,AND DISGORGEMENT IN THE AMOUNT OF $14,243











DISGORGEMENT IN THE AMOUNT OF $14,243





JEFFERIES LLC (I) TENDERED SHARES FOR A PARTIAL TENDER OFFER INEXCESS OF ITS NET LONG POSITION; AND (II) FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE ADEQUATE WRITTEN SUPERVISORYPROCEDURES, AND A SYSTEM FOR APPLYING SUCH PROCEDURES,REASONABLY DESIGNED TO PREVENT AND DETECT VIOLATIONS OFEXCHANGE ACT RULE 14E-4.VIOLATION OF EXCHANGE RULES 4.2 AND 4.24; RULE 14E-4PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDEDSANCTION: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $25,000,AND DISGORGEMENT IN THE AMOUNT OF $14,243


Resolution:


Sanction Details: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $25,000 ANDDISGORGEMENT IN THE AMOUNT OF $14,243


No


Consent


Allegations: FIRM TENDERED SHARES FOR A PARTIAL TENDER OFFER IN EXCESS OFITS NET LONG POSITION; DID NOT ESTABLISH, MAINTAIN,AND ENFORCEADEQUATE WRITTEN SUPERVISORY PROCEDURES,AND A SYSTEM FORAPPLYING SUCH PROCEDURES.











DISGORGEMENT OF $14,243.00


Docket/Case Number: STAR NO. 20180589340/FILE NO.USRI-8751



FIRM TENDERED SHARES FOR A PARTIAL TENDER OFFER IN EXCESS OFITS NET LONG POSITION; DID NOT ESTABLISH, MAINTAIN,AND ENFORCEADEQUATE WRITTEN SUPERVISORY PROCEDURES,AND A SYSTEM FORAPPLYING SUCH PROCEDURES.


Resolution:

Other Sanctions Ordered: CENSURE, A MONETARY FINE, DISGORGEMENT

Sanction Details: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $25,000, ANDDISGORGEMENT IN THE AMOUNT OF $14,243.

Firm Statement FIRM TENDERED SHARES FOR A PARTIAL TENDER OFFER IN EXCESS OFITS NET LONG POSITION; DID NOT ESTABLISH, MAINTAIN,AND ENFORCEADEQUATE WRITTEN SUPERVISORY PROCEDURES,AND A SYSTEM FORAPPLYING SUCH PROCEDURES.


Consent

Disclosure 16 of 85

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES LLC("JEFFERIES", THE "FIRM", OR "RESPONDENT") CONSENTED TO THESANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOACCURATELY RECORD THE ORDER RECEIPT AND ORDER TRANSMISSIONTIMES OF MANUAL OPTIONS ORDERS IT HAD ROUTED TO FLOORBROKERS AT NYSE AMERICAN AND VARIOUS OTHER NATIONALSECURITIES EXCHANGES FOR EXECUTION.THE FINDINGS STATED THAT THE FIRM'S WRITTEN SUPERVISORYPROCEDURES ("WSPS") AND SUPERVISORY SYSTEM APPLICABLE TO THEHANDLING OF MANUAL OPTIONS ORDERS BY ITS DERIVATIVES TRADINGDESK WERE NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH, AND TO DETECT AND PREVENT, INSOFAR AS PRACTICABLE,VIOLATIONS OF, THE APPLICABLE RECORDKEEPING PROVISIONS OF THEFEDERAL SECURITIES LAWS AND NYSE AMERICAN RULES.







Initiated By: NYSE AMERICAN LLC







WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES LLC("JEFFERIES", THE "FIRM", OR "RESPONDENT") CONSENTED TO THESANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOACCURATELY RECORD THE ORDER RECEIPT AND ORDER TRANSMISSIONTIMES OF MANUAL OPTIONS ORDERS IT HAD ROUTED TO FLOORBROKERS AT NYSE AMERICAN AND VARIOUS OTHER NATIONALSECURITIES EXCHANGES FOR EXECUTION.THE FINDINGS STATED THAT THE FIRM'S WRITTEN SUPERVISORYPROCEDURES ("WSPS") AND SUPERVISORY SYSTEM APPLICABLE TO THEHANDLING OF MANUAL OPTIONS ORDERS BY ITS DERIVATIVES TRADINGDESK WERE NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH, AND TO DETECT AND PREVENT, INSOFAR AS PRACTICABLE,VIOLATIONS OF, THE APPLICABLE RECORDKEEPING PROVISIONS OF THEFEDERAL SECURITIES LAWS AND NYSE AMERICAN RULES.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED A TOTAL OF $64,000, OF WHICH$32,000 IS PAYABLE TO THE EXCHANGE.


No




Initiated By: NYSE AMERICAN LLC


Allegations: INACCURATE ORDER RECEIPT AND TRANSMISSION TIMES FOR CERTAINTRADES FROM ON OR ABOUT 7/11/16 TO 7/15/16 AND FOR RELATEDFINDINGS REGARDING THE FIRM'S WRITTEN SUPERVISORY PROCEDURESFOR CONFIRMING THE ACCURACY OF ORDER RECEIPT ANDTRANSMISSION TIMES.








Censure







Resolution:

Other Sanctions Ordered: CENSURED AND FINED


Firm Statement THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOINACCURATE ORDER RECEIPT AND TRANSMISSION TIMES FOR CERTAINTRADES FROM ON OR ABOUT 7/11/16 TO 7/15/16 AND FOR RELATEDFINDINGS REGARDING THE FIRM'S WRITTEN SUPERVISORY PROCEDURESFOR CONFIRMING THE ACCURACY OF ORDER RECEIPT ANDTRANSMISSION TIMES.



Disclosure 17 of 85

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES LLC("JEFFERIES", THE "FIRM", OR "RESPONDENT") CONSENTED TO THESANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOACCURATELY RECORD THE ORDER RECEIPT AND ORDER TRANSMISSIONTIMES OF MANUAL OPTIONS ORDERS IT HAD ROUTED TO FLOORBROKERS AT PHLX AND VARIOUS OTHER NATIONAL SECURITIESEXCHANGES FOR EXECUTION.THE FINDINGS STATED THAT THE FIRM'S WRITTEN SUPERVISORYPROCEDURES ("WSPS") AND SUPERVISORY SYSTEM APPLICABLE TO THEHANDLING OF MANUAL OPTIONS ORDERS BY ITS DERIVATIVES TRADINGDESK WERE NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH, AND TO DETECT AND PREVENT, INSOFAR AS PRACTICABLE,VIOLATIONS OF, THE APPLICABLE RECORDKEEPING PROVISIONS OF THEFEDERAL SECURITIES LAWS AND PHLX RULES.







Initiated By: NASDAQ PHLX LLC







WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES LLC("JEFFERIES", THE "FIRM", OR "RESPONDENT") CONSENTED TO THESANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOACCURATELY RECORD THE ORDER RECEIPT AND ORDER TRANSMISSIONTIMES OF MANUAL OPTIONS ORDERS IT HAD ROUTED TO FLOORBROKERS AT PHLX AND VARIOUS OTHER NATIONAL SECURITIESEXCHANGES FOR EXECUTION.THE FINDINGS STATED THAT THE FIRM'S WRITTEN SUPERVISORYPROCEDURES ("WSPS") AND SUPERVISORY SYSTEM APPLICABLE TO THEHANDLING OF MANUAL OPTIONS ORDERS BY ITS DERIVATIVES TRADINGDESK WERE NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH, AND TO DETECT AND PREVENT, INSOFAR AS PRACTICABLE,VIOLATIONS OF, THE APPLICABLE RECORDKEEPING PROVISIONS OF THEFEDERAL SECURITIES LAWS AND PHLX RULES.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED A TOTAL OF $64,000, OF WHICH$32,000 IS PAYABLE TO THE EXCHANGE.


No







Allegations: INACCURATE ORDER RECEIPT AND TRANSMISSION TIMES FOR CERTAINTRADES FROM ON OR ABOUT 7/11/16 TO 7/15/16 AND FOR RELATEDFINDINGS REGARDING THE FIRM'S WRITTEN SUPERVISORY PROCEDURESFOR CONFIRMING THE ACCURACY OF ORDER RECEIPT ANDTRANSMISSION TIMES.








Censure


FINE





Resolution:


Sanction Details: FIRM WAS CENSURED AND FINED $32,000. FUNDS DEBITED FROM FIRM'SNASDAQ ACCOUNT ON OR ABOUT 8/26/19




Disclosure 18 of 85

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Allegations: JEFFERIES LLC (I) FROM ON OR ABOUT JULY 11, 2016 THROUGH OR ABOUTJULY 15, 2016, FAILED TO RECORD ACCURATE ORDER RECEIPT TIMES FORELEVEN (11) OF THE TWENTY (20) SAMPLED MANUAL CUSTOMER OPTIONSORDERS THAT WERE ROUTED TO AND EXECUTED ON THE EXCHANGE; (II)FROM ON OR ABOUT JULY 11, 2016 THROUGH ON OR ABOUT JULY 15, 2016,FAILED TO RECORD ACCURATE ORDER TRANSMISSION TIMES FORTWELVE (12) OF THE TWENTY (20) SAMPLED MANUAL CUSTOMEROPTIONS ORDERS THAT WERE REROUTED TO AND EXECUTED ON THEEXCHANGE; AND (II) AS OF JULY 2016 THROUGH IN OR ABOUT JULY 2019,FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTEN SUPERVISORYPROCEDURES ("WSPS"), AND A SYSTEM FOR APPLYING SUCHPROCEDURES, REASONABLY DESIGNED TO PREVENT AND DETECTVIOLATIONS OF CBOE RULE 15.1; AND SECTION 17(A) OF THE EXCHANGEACT AND RULE 17A-3 THEREUNDER. SPECIFICALLY, THE FIRM'S WSP'S ANDSUPERVISORY SYSTEM DID NOT INCLUDE, AMONG OTHER THINGS, ASUPERVISORY REVIEW FOR THE PRESENCE AND ACCURACY OF THEORDER RECEIPT AND TRANSMISSION TIMES OF OPTIONS ORDERSHANDLED BY ITS DERIVATIVES TRADING DESK.VIOLATION OF EXCHANGE RULES 4.2, 4.24, 15.1; SECTION 17(A) OF THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND RULE 17A3THEREUNDER.SANCTION: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF$20,000.












Docket/Case Number: STAR NO. 20160487695 / FILE NO. USE-1693



JEFFERIES LLC (I) FROM ON OR ABOUT JULY 11, 2016 THROUGH OR ABOUTJULY 15, 2016, FAILED TO RECORD ACCURATE ORDER RECEIPT TIMES FORELEVEN (11) OF THE TWENTY (20) SAMPLED MANUAL CUSTOMER OPTIONSORDERS THAT WERE ROUTED TO AND EXECUTED ON THE EXCHANGE; (II)FROM ON OR ABOUT JULY 11, 2016 THROUGH ON OR ABOUT JULY 15, 2016,FAILED TO RECORD ACCURATE ORDER TRANSMISSION TIMES FORTWELVE (12) OF THE TWENTY (20) SAMPLED MANUAL CUSTOMEROPTIONS ORDERS THAT WERE REROUTED TO AND EXECUTED ON THEEXCHANGE; AND (II) AS OF JULY 2016 THROUGH IN OR ABOUT JULY 2019,FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTEN SUPERVISORYPROCEDURES ("WSPS"), AND A SYSTEM FOR APPLYING SUCHPROCEDURES, REASONABLY DESIGNED TO PREVENT AND DETECTVIOLATIONS OF CBOE RULE 15.1; AND SECTION 17(A) OF THE EXCHANGEACT AND RULE 17A-3 THEREUNDER. SPECIFICALLY, THE FIRM'S WSP'S ANDSUPERVISORY SYSTEM DID NOT INCLUDE, AMONG OTHER THINGS, ASUPERVISORY REVIEW FOR THE PRESENCE AND ACCURACY OF THEORDER RECEIPT AND TRANSMISSION TIMES OF OPTIONS ORDERSHANDLED BY ITS DERIVATIVES TRADING DESK.VIOLATION OF EXCHANGE RULES 4.2, 4.24, 15.1; SECTION 17(A) OF THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND RULE 17A3THEREUNDER.SANCTION: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF$20,000.


Resolution:


Sanction Details: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $20,000.


No


Consent


Allegations: THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOINACCURATE ORDER RECEIPT AND TRANSMISSION TIMES FOR CERTAINTRADES FROM ON OR ABOUT 7/11/16 TO 7/15/16 AND FOR RELATEDFINDINGS REGARDING THE FIRM'S WRITTEN SUPERVISORY PROCEDURESFOR CONFIRMING THE ACCURACY OF ORDER RECEIPT ANDTRANSMISSION TIMES.












Docket/Case Number: USE-1693/STAR NO. 20160487695



THE FIRM AGREED TO A REGULATORY SETTLEMENT RELATING TOINACCURATE ORDER RECEIPT AND TRANSMISSION TIMES FOR CERTAINTRADES FROM ON OR ABOUT 7/11/16 TO 7/15/16 AND FOR RELATEDFINDINGS REGARDING THE FIRM'S WRITTEN SUPERVISORY PROCEDURESFOR CONFIRMING THE ACCURACY OF ORDER RECEIPT ANDTRANSMISSION TIMES.


Resolution:


Sanction Details: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $20,000.FINE WAS PAID ON 7/25/19.



Consent

Disclosure 19 of 85

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOHOLD CUSTOMER FULLY-PAID AND EXCESS MARGIN SECURITIES IN GOODCONTROL LOCATIONS. THE FINDINGS STATED THAT FROM JULY 2013THROUGH MARCH 2016, THE FIRM HELD FULLY-PAID AND EXCESS MARGINSECURITIES BELONGING TO FOUR FIRM CUSTOMERS IN A CLEARANCEACCOUNT AT A FOREIGN DEPOSITORY IN GREECE. ALL OF THESECURITIES HELD IN THE GREECE CLEARANCE ACCOUNT WERE SUBJECTTO A GENERAL LIEN BY THE GREECE FOREIGN DEPOSITORY, RATHERTHAN A LIEN LIMITED FOR THEIR PARTICULAR SAFE CUSTODY ORADMINISTRATION. HOWEVER, THE FIRM DID NOT TAKE STEPS TODETERMINE WHETHER SUCH A LIEN EXISTED, DID NOT IDENTIFY THE LIENUNTIL AUGUST 2015, AND DID NOT TRANSFER THE LAST CUSTOMER'SFULLY-PAID SECURITIES FROM THE CLEARANCE ACCOUNT TO ANAPPROPRIATE SEGREGATION ACCOUNT UNTIL MARCH 2016. FROMMARCH 2015 THROUGH FEBRUARY 2016, THE FIRM HELD CUSTOMERFULLY-PAID AND EXCESS MARGIN SECURITIES IN A CLEARANCE ACCOUNTAT A FOREIGN DEPOSITORY IN SPAIN. THE SECURITIES HELD IN THE SPAINCLEARANCE ACCOUNT WERE SUBJECT TO A LIEN BY THE SPANISHFOREIGN DEPOSITORY, ITS AGENTS OR CREDITORS, IF THERE WERECLAIMS OF PAYMENT FOR THE PURCHASE PRICE, SAFE CUSTODY ORADMINISTRATION OF THE SECURITIES IN THE ACCOUNT. ON THREE DAYSBETWEEN MARCH 2015 AND MAY 2015, THERE WERE CLAIMS FORPAYMENT OF THE PURCHASE PRICE OF SOME OF THE SECURITIES IN THEACCOUNT. HOWEVER, THE FIRM DID NOT TAKE STEPS TO DETERMINEWHETHER A LIEN EXISTED AND DID NOT IDENTIFY THE LIEN. FROM MAY22, 2015 TO JUNE 8, 2015, THE FIRM FAILED TO PROMPTLY TRANSFERAPPROXIMATELY 28 MILLION SHARES OF 63 DIFFERENT CUSTOMERFULLY-PAID AND EXCESS MARGIN SECURITIES FROM 14 FOREIGNCLEARANCE ACCOUNTS THAT WERE NOT GOOD CONTROL LOCATIONS TOFOREIGN SEGREGATION ACCOUNTS. TO OBTAIN POSSESSION ORCONTROL, THE FIRM GENERATED A DAILY REPORT THAT IDENTIFIEDINSTANCES IN WHICH FOREIGN SECURITIES NEEDED TO BETRANSFERRED TO FOREIGN SEGREGATION ACCOUNTS IN ORDER TOOBTAIN PHYSICAL POSSESSION OR CONTROL OF THE SECURITIES (THEREPORT). THE FIRM TASKED OPERATIONS PERSONNEL LOCATED AT ONEOF THE FIRM'S FOREIGN AFFILIATES (THE AFFILIATE PERSONNEL) WITHREVIEWING THE REPORT MANUALLY AND TRANSFERRING THESECURITIES AS NECESSARY. THE AFFILIATE PERSONNEL DID NOTPROMPTLY MAKE THE NECESSARY TRANSFERS FOR THESE 63SECURITIES. EVEN THOUGH THE FIRM'S U.S.-BASED OPERATIONSDEPARTMENT WAS ULTIMATELY RESPONSIBLE FOR THE FIRM'SCOMPLIANCE WITH THE CUSTOMER PROTECTION RULE, THE FIRM DIDNOT ESTABLISH A PROCESS FOR THAT DEPARTMENT TO REVIEW THEAFFILIATE PERSONNEL'S WORK. THESE ERRORS RESULTED IN DEFICITSIN THE CUSTOMER SECURITIES THE FIRM WAS REQUIRED TOSEGREGATE. THE FIRM DID NOT CORRECT THE DEFICITS FOR PERIODSRANGING FROM 2 DAYS TO 12 DAYS. THE FINDINGS ALSO STATED THATFROM JULY 2013 UNTIL JULY 2016, THE FIRM FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH THE POSSESSION OR CONTROL REQUIREMENTS OFTHE CUSTOMER PROTECTION RULE FOR CUSTOMER SECURITIES HELDAT FOREIGN DEPOSITORIES. FROM JULY 2013 TO JULY 2016, THE FIRMUNREASONABLY FAILED TO INSTRUCT OR ESTABLISH WRITTENPROCEDURES REQUIRING THE STAFF RESPONSIBLE FOR OPENINGACCOUNTS AT FOREIGN DEPOSITORIES TO PERFORM DUE DILIGENCE OROBTAIN AND RETAIN WRITTEN DOCUMENTATION TO VERIFY WHETHERTHE FOREIGN DEPOSITORY WAS A SATISFACTORY CONTROL LOCATION.IN ADDITION, FROM MAY 2015 TO NOVEMBER 2015, THE FIRM FAILED TOREASONABLY SUPERVISE THE AFFILIATE PERSONNEL RESPONSIBLE FORMANUALLY REVIEWING THE REPORT AND TRANSFERRING FOREIGNSECURITIES TO SEGREGATION ACCOUNTS.







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOHOLD CUSTOMER FULLY-PAID AND EXCESS MARGIN SECURITIES IN GOODCONTROL LOCATIONS. THE FINDINGS STATED THAT FROM JULY 2013THROUGH MARCH 2016, THE FIRM HELD FULLY-PAID AND EXCESS MARGINSECURITIES BELONGING TO FOUR FIRM CUSTOMERS IN A CLEARANCEACCOUNT AT A FOREIGN DEPOSITORY IN GREECE. ALL OF THESECURITIES HELD IN THE GREECE CLEARANCE ACCOUNT WERE SUBJECTTO A GENERAL LIEN BY THE GREECE FOREIGN DEPOSITORY, RATHERTHAN A LIEN LIMITED FOR THEIR PARTICULAR SAFE CUSTODY ORADMINISTRATION. HOWEVER, THE FIRM DID NOT TAKE STEPS TODETERMINE WHETHER SUCH A LIEN EXISTED, DID NOT IDENTIFY THE LIENUNTIL AUGUST 2015, AND DID NOT TRANSFER THE LAST CUSTOMER'SFULLY-PAID SECURITIES FROM THE CLEARANCE ACCOUNT TO ANAPPROPRIATE SEGREGATION ACCOUNT UNTIL MARCH 2016. FROMMARCH 2015 THROUGH FEBRUARY 2016, THE FIRM HELD CUSTOMERFULLY-PAID AND EXCESS MARGIN SECURITIES IN A CLEARANCE ACCOUNTAT A FOREIGN DEPOSITORY IN SPAIN. THE SECURITIES HELD IN THE SPAINCLEARANCE ACCOUNT WERE SUBJECT TO A LIEN BY THE SPANISHFOREIGN DEPOSITORY, ITS AGENTS OR CREDITORS, IF THERE WERECLAIMS OF PAYMENT FOR THE PURCHASE PRICE, SAFE CUSTODY ORADMINISTRATION OF THE SECURITIES IN THE ACCOUNT. ON THREE DAYSBETWEEN MARCH 2015 AND MAY 2015, THERE WERE CLAIMS FORPAYMENT OF THE PURCHASE PRICE OF SOME OF THE SECURITIES IN THEACCOUNT. HOWEVER, THE FIRM DID NOT TAKE STEPS TO DETERMINEWHETHER A LIEN EXISTED AND DID NOT IDENTIFY THE LIEN. FROM MAY22, 2015 TO JUNE 8, 2015, THE FIRM FAILED TO PROMPTLY TRANSFERAPPROXIMATELY 28 MILLION SHARES OF 63 DIFFERENT CUSTOMERFULLY-PAID AND EXCESS MARGIN SECURITIES FROM 14 FOREIGNCLEARANCE ACCOUNTS THAT WERE NOT GOOD CONTROL LOCATIONS TOFOREIGN SEGREGATION ACCOUNTS. TO OBTAIN POSSESSION ORCONTROL, THE FIRM GENERATED A DAILY REPORT THAT IDENTIFIEDINSTANCES IN WHICH FOREIGN SECURITIES NEEDED TO BETRANSFERRED TO FOREIGN SEGREGATION ACCOUNTS IN ORDER TOOBTAIN PHYSICAL POSSESSION OR CONTROL OF THE SECURITIES (THEREPORT). THE FIRM TASKED OPERATIONS PERSONNEL LOCATED AT ONEOF THE FIRM'S FOREIGN AFFILIATES (THE AFFILIATE PERSONNEL) WITHREVIEWING THE REPORT MANUALLY AND TRANSFERRING THESECURITIES AS NECESSARY. THE AFFILIATE PERSONNEL DID NOTPROMPTLY MAKE THE NECESSARY TRANSFERS FOR THESE 63SECURITIES. EVEN THOUGH THE FIRM'S U.S.-BASED OPERATIONSDEPARTMENT WAS ULTIMATELY RESPONSIBLE FOR THE FIRM'SCOMPLIANCE WITH THE CUSTOMER PROTECTION RULE, THE FIRM DIDNOT ESTABLISH A PROCESS FOR THAT DEPARTMENT TO REVIEW THEAFFILIATE PERSONNEL'S WORK. THESE ERRORS RESULTED IN DEFICITSIN THE CUSTOMER SECURITIES THE FIRM WAS REQUIRED TOSEGREGATE. THE FIRM DID NOT CORRECT THE DEFICITS FOR PERIODSRANGING FROM 2 DAYS TO 12 DAYS. THE FINDINGS ALSO STATED THATFROM JULY 2013 UNTIL JULY 2016, THE FIRM FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH THE POSSESSION OR CONTROL REQUIREMENTS OFTHE CUSTOMER PROTECTION RULE FOR CUSTOMER SECURITIES HELDAT FOREIGN DEPOSITORIES. FROM JULY 2013 TO JULY 2016, THE FIRMUNREASONABLY FAILED TO INSTRUCT OR ESTABLISH WRITTENPROCEDURES REQUIRING THE STAFF RESPONSIBLE FOR OPENINGACCOUNTS AT FOREIGN DEPOSITORIES TO PERFORM DUE DILIGENCE OROBTAIN AND RETAIN WRITTEN DOCUMENTATION TO VERIFY WHETHERTHE FOREIGN DEPOSITORY WAS A SATISFACTORY CONTROL LOCATION.IN ADDITION, FROM MAY 2015 TO NOVEMBER 2015, THE FIRM FAILED TOREASONABLY SUPERVISE THE AFFILIATE PERSONNEL RESPONSIBLE FORMANUALLY REVIEWING THE REPORT AND TRANSFERRING FOREIGNSECURITIES TO SEGREGATION ACCOUNTS.






Initiated By: FINRA






Other Product Type(s): UNSPECIFIED SECURITIES

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOHOLD CUSTOMER FULLY-PAID AND EXCESS MARGIN SECURITIES IN GOODCONTROL LOCATIONS. THE FINDINGS STATED THAT FROM JULY 2013THROUGH MARCH 2016, THE FIRM HELD FULLY-PAID AND EXCESS MARGINSECURITIES BELONGING TO FOUR FIRM CUSTOMERS IN A CLEARANCEACCOUNT AT A FOREIGN DEPOSITORY IN GREECE. ALL OF THESECURITIES HELD IN THE GREECE CLEARANCE ACCOUNT WERE SUBJECTTO A GENERAL LIEN BY THE GREECE FOREIGN DEPOSITORY, RATHERTHAN A LIEN LIMITED FOR THEIR PARTICULAR SAFE CUSTODY ORADMINISTRATION. HOWEVER, THE FIRM DID NOT TAKE STEPS TODETERMINE WHETHER SUCH A LIEN EXISTED, DID NOT IDENTIFY THE LIENUNTIL AUGUST 2015, AND DID NOT TRANSFER THE LAST CUSTOMER'SFULLY-PAID SECURITIES FROM THE CLEARANCE ACCOUNT TO ANAPPROPRIATE SEGREGATION ACCOUNT UNTIL MARCH 2016. FROMMARCH 2015 THROUGH FEBRUARY 2016, THE FIRM HELD CUSTOMERFULLY-PAID AND EXCESS MARGIN SECURITIES IN A CLEARANCE ACCOUNTAT A FOREIGN DEPOSITORY IN SPAIN. THE SECURITIES HELD IN THE SPAINCLEARANCE ACCOUNT WERE SUBJECT TO A LIEN BY THE SPANISHFOREIGN DEPOSITORY, ITS AGENTS OR CREDITORS, IF THERE WERECLAIMS OF PAYMENT FOR THE PURCHASE PRICE, SAFE CUSTODY ORADMINISTRATION OF THE SECURITIES IN THE ACCOUNT. ON THREE DAYSBETWEEN MARCH 2015 AND MAY 2015, THERE WERE CLAIMS FORPAYMENT OF THE PURCHASE PRICE OF SOME OF THE SECURITIES IN THEACCOUNT. HOWEVER, THE FIRM DID NOT TAKE STEPS TO DETERMINEWHETHER A LIEN EXISTED AND DID NOT IDENTIFY THE LIEN. FROM MAY22, 2015 TO JUNE 8, 2015, THE FIRM FAILED TO PROMPTLY TRANSFERAPPROXIMATELY 28 MILLION SHARES OF 63 DIFFERENT CUSTOMERFULLY-PAID AND EXCESS MARGIN SECURITIES FROM 14 FOREIGNCLEARANCE ACCOUNTS THAT WERE NOT GOOD CONTROL LOCATIONS TOFOREIGN SEGREGATION ACCOUNTS. TO OBTAIN POSSESSION ORCONTROL, THE FIRM GENERATED A DAILY REPORT THAT IDENTIFIEDINSTANCES IN WHICH FOREIGN SECURITIES NEEDED TO BETRANSFERRED TO FOREIGN SEGREGATION ACCOUNTS IN ORDER TOOBTAIN PHYSICAL POSSESSION OR CONTROL OF THE SECURITIES (THEREPORT). THE FIRM TASKED OPERATIONS PERSONNEL LOCATED AT ONEOF THE FIRM'S FOREIGN AFFILIATES (THE AFFILIATE PERSONNEL) WITHREVIEWING THE REPORT MANUALLY AND TRANSFERRING THESECURITIES AS NECESSARY. THE AFFILIATE PERSONNEL DID NOTPROMPTLY MAKE THE NECESSARY TRANSFERS FOR THESE 63SECURITIES. EVEN THOUGH THE FIRM'S U.S.-BASED OPERATIONSDEPARTMENT WAS ULTIMATELY RESPONSIBLE FOR THE FIRM'SCOMPLIANCE WITH THE CUSTOMER PROTECTION RULE, THE FIRM DIDNOT ESTABLISH A PROCESS FOR THAT DEPARTMENT TO REVIEW THEAFFILIATE PERSONNEL'S WORK. THESE ERRORS RESULTED IN DEFICITSIN THE CUSTOMER SECURITIES THE FIRM WAS REQUIRED TOSEGREGATE. THE FIRM DID NOT CORRECT THE DEFICITS FOR PERIODSRANGING FROM 2 DAYS TO 12 DAYS. THE FINDINGS ALSO STATED THATFROM JULY 2013 UNTIL JULY 2016, THE FIRM FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH THE POSSESSION OR CONTROL REQUIREMENTS OFTHE CUSTOMER PROTECTION RULE FOR CUSTOMER SECURITIES HELDAT FOREIGN DEPOSITORIES. FROM JULY 2013 TO JULY 2016, THE FIRMUNREASONABLY FAILED TO INSTRUCT OR ESTABLISH WRITTENPROCEDURES REQUIRING THE STAFF RESPONSIBLE FOR OPENINGACCOUNTS AT FOREIGN DEPOSITORIES TO PERFORM DUE DILIGENCE OROBTAIN AND RETAIN WRITTEN DOCUMENTATION TO VERIFY WHETHERTHE FOREIGN DEPOSITORY WAS A SATISFACTORY CONTROL LOCATION.IN ADDITION, FROM MAY 2015 TO NOVEMBER 2015, THE FIRM FAILED TOREASONABLY SUPERVISE THE AFFILIATE PERSONNEL RESPONSIBLE FORMANUALLY REVIEWING THE REPORT AND TRANSFERRING FOREIGNSECURITIES TO SEGREGATION ACCOUNTS.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $150,000. FINES PAID IN FULL ONJANUARY 31, 2018.


No








https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2016050185301


Initiated By: FINRA


Censure


THE FIRM WAS CENSURED AND FINED $150,000.





Allegations: THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OFFINDINGS THAT IT DID NOT HOLD CERTAIN CUSTOMER FULLY-PAID ANDEXCESS MARGIN SECURITIES IN GOOD CONTROL LOCATIONS AND DIDNOT REASONABLY SUPERVISE THE AFFILIATE PERSONNEL RESPONSIBLEFOR MANUALLY REVIEWING THE REPORT AND TRANSFERRING FOREIGNSECURITIES TO SEGREGATION ACCOUNTS.



Resolution:

Other Sanctions Ordered: N/A

Sanction Details: FINE PAID



Disclosure 20 of 85

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOTIMELY REPORT TRANSACTIONS IN TRACE-ELIGIBLE CORPORATESECURITIES TO TRACE. THE FINDINGS STATED THAT THE FIRM FAILED TOPROVIDE EVIDENCE THAT IT ENFORCED CERTAIN ASPECTS OF ITS WSPSCONCERNING THE TIMELINESS OF TRADE REPORTS SUBMITTED TOTRACE. SPECIFICALLY, THE WSPS PROVIDE, IN PART, THAT SUPERVISORSMUST REVIEW WEEKLY TRACE REPORTING STATISTICS AND THEMONTHLY TRACE REPORT CARD TO IDENTIFY AND ESCALATE ISSUES ANDIMPLEMENT REMEDIAL ACTION AS NEEDED. THE FIRM, HOWEVER, DIDNOT REVIEW THE TRACE REPORTING STATISTICS FOR ITS MPID DURINGTHE REVIEW PERIOD. THE FIRM ALSO FAILED TO PROVIDE ANY EVIDENCEOF CORRECTIVE ACTIONS TAKEN TO REMEDIATE ITS PATTERN OF LATETRADE REPORTING TO TRACE.








Initiated By: FINRA


Other


N/A



Principal Product Type: No Product


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOTIMELY REPORT TRANSACTIONS IN TRACE-ELIGIBLE CORPORATESECURITIES TO TRACE. THE FINDINGS STATED THAT THE FIRM FAILED TOPROVIDE EVIDENCE THAT IT ENFORCED CERTAIN ASPECTS OF ITS WSPSCONCERNING THE TIMELINESS OF TRADE REPORTS SUBMITTED TOTRACE. SPECIFICALLY, THE WSPS PROVIDE, IN PART, THAT SUPERVISORSMUST REVIEW WEEKLY TRACE REPORTING STATISTICS AND THEMONTHLY TRACE REPORT CARD TO IDENTIFY AND ESCALATE ISSUES ANDIMPLEMENT REMEDIAL ACTION AS NEEDED. THE FIRM, HOWEVER, DIDNOT REVIEW THE TRACE REPORTING STATISTICS FOR ITS MPID DURINGTHE REVIEW PERIOD. THE FIRM ALSO FAILED TO PROVIDE ANY EVIDENCEOF CORRECTIVE ACTIONS TAKEN TO REMEDIATE ITS PATTERN OF LATETRADE REPORTING TO TRACE.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $37,500. FINES PAID IN FULL ONJANUARY 8, 2018.


No




Initiated By: FINRA



Allegations: TRACE REPORTING AND RELATED SUPERVISORY VIOLATIONS FROMOCTOBER 1, 2015 THROUGH DECEMBER 31, 2015









Censure


NONE





Resolution:



Firm Statement TRACE REPORTING AND RELATED SUPERVISORY VIOLATIONS FROMOCTOBER 1, 2015 THROUGH DECEMBER 31, 2015.



Disclosure 21 of 85

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT WAS NOT INCOMPLIANCE WITH A 2011 UNDERTAKING FROM A PREVIOUS AWC FOR 18MONTHS AFTER THE FIRM REPRESENTED OTHERWISE TO FINRA AND THISFAILURE WAS A DIRECT RESULT OF A LACK OF AN ADEQUATESUPERVISORY SYSTEM TO ENSURE COMPLIANCE WITH REGULATORYUNDERTAKINGS. THE FINDINGS STATED THAT IN RESPONSE TO THE 2011UNDERTAKING, THE FIRM MADE THE DECISION TO LOWER ITS MAXIMUMSHARE QUANTITY (SOQ) CONTROLS AND SUBSEQUENTLY REPRESENTEDTO FINRA IN A LETTER THAT IT HAD IMPLEMENTED REVISED CONTROLSAND WRITTEN SUPERVISORY PROCEDURES (WSPS) TO ADDRESS THEDEFICIENCIES OUTLINED IN THE 2011 AWC. AS THE RESULT OF ANERRONEOUS ORDER ENTERED ON NASDAQ BY THE FIRM ANINVESTIGATION BEGAN AND IT WAS DISCOVERED THAT CONTRARY TOWRITTEN REPRESENTATIONS TO FINRA, THAT ALTHOUGH THE FIRM HADREVISED ITS WSPS BY FEBRUARY 16, 2012, IT FAILED TO REDUCE ITS SOQCONTROL IN ITS ORDER MANAGEMENT SYSTEM (FIDESSA) (THE SOQCONTROL) UNTIL AUGUST 30, 2013. THE FIRM DID NOT CHANGE THE SOQCONTROL BECAUSE THE EQUITIES DEPARTMENT DECIDED THATADDITIONAL DISCUSSION WAS NEEDED PRIOR TO MAKING THEREQUESTED CHANGE TO AVOID THE POSSIBILITY OF IMPAIRINGCUSTOMER TRADING. BOTH THE EQUITIES AND COMPLIANCEDEPARTMENTS KNEW OR SHOULD HAVE KNOWN, THE FIRM DID NOTCHANGE THE SOQ CONTROL IN RESPONSE TO THE 2011 UNDERTAKING.ADDITIONALLY, THERE WERE MULTIPLE INTERNAL COMMUNICATIONSINDICATING THAT THE EQUITIES DEPARTMENT HAD NOT LOWERED THESOQ CONTROL. THE FINDINGS ALSO STATED THAT IN TWO WRITTENRESPONSES TO FINRA INFORMATION REQUESTS, THE FIRM SUBMITTEDMISLEADING AND/OR INACCURATE RESPONSES RELATED TO ITSCOMPLIANCE WITH THE 2011 UNDERTAKING. UPON LEARNING OF THEFIRM'S NON-COMPLIANCE, CERTAIN LEGAL AND COMPLIANCE PERSONNELDISCUSSED THE NEED TO TELEPHONE FINRA AND REPORT THAT, WHILETHE FIRM HAD BEEN PROMPT IN UPDATING ITS WSPS IN COMPLIANCEWITH THE 2011 UNDERTAKING, THE SOQ CONTROLS HAD NOT BEENLOWERED. A CALL WITH FINRA WAS SCHEDULED BUT ULTIMATELY DIDNOT TAKE PLACE. THEREFORE, THE RESPONSES REMAINEDUNADDRESSED, AND THE FIRM'S FAILURE TO CORRECT PRIORMISSTATEMENTS PERSISTED UNTIL WHEN FINRA SOUGHT ADDITIONALINFORMATION FROM THE FIRM. THE FINDINGS ALSO INCLUDED THAT THEFIRM HAD A NUMBER OF PRE-TRADE CONTROLS DESIGNED TO PREVENTTHE ENTRY OF ERRONEOUS ORDERS. HOWEVER, THERE WERE SEVERALPRIMARY DEFICIENCIES WITH THE FIRM'S PRE-TRADE PRICE AND SIZECONTROLS. THE FIRM'S CONTROLS IN ITS FIDESSA SYSTEM CONSISTEDOF SOFT BLOCKS THAT COULD BE OVERRIDDEN BY THE FIRM'S TRADERS,CAUSING THEM TO BE INEFFECTIVE WITHOUT ADDITIONAL REASONABLECONTROLS. THE FIRM DID NOT HAVE REAL-TIME SUPERVISORY REVIEWSOF SOFT-BLOCK OVERRIDES OR AN APPROVAL PROCESS FOR SUCHOVERRIDES AND DID NOT CONDUCT A POST-TRADE REVIEW OFOVERRIDES, INCLUDING ON AN ANNUAL BASIS. ADDITIONALLY, THE FIRM'SWSPS DID NOT ADDRESS THE APPROPRIATE USE OF OVERRIDES, ANDTHE FIRM DID NOT CONDUCT ANY TRAINING RELATED TO THEAPPROPRIATE USE OF OVERRIDES. FINRA FOUND THAT THE FIRM DID NOTHAVE FIDESSA CONTROLS THAT TOOK INTO ACCOUNT THE INDIVIDUALTRADING CHARACTERISTICS OF A SECURITY, SUCH AS A PARTICULARSECURITIES LIQUIDITY AND/OR ADV. FURTHER, WHEN IT DID IMPLEMENTAN ADV CONTROL, THE PARAMETER WAS SET TOO HIGH TO BEEFFECTIVE AND WAS THEREFORE NOT REASONABLY DESIGNED, ABSENTADDITIONAL CONTROLS. THE FIRM FAILED TO ESTABLISH, DOCUMENT,AND MAINTAIN A REASONABLE SYSTEM FOR REGULARLY REVIEWING THEEFFECTIVENESS OF ITS RISK MANAGEMENT CONTROLS ANDSUPERVISORY PROCEDURES. FINRA ALSO FOUND THAT THE FIRMBUCKETED CLIENTS INTO CREDIT LIMIT TIERS ON A "CASE BY CASE"BASIS. THE FIRM FAILED TO MAINTAIN SUFFICIENT DOCUMENTATIONRELATED TO THE DUE DILIGENCE IT CONDUCTED IN ASSIGNING CLIENTSTO TIERS. ADDITIONALLY, THE FIRM DID NOT HAVE ANY CONTROLS THATADDRESSED HOW THE FIRM'S SYSTEM PREVENTED THE ENTRY OFORDERS THAT EXCEEDED APPROPRIATE CAPITAL THRESHOLDS FOR THEBROKER-DEALER.







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT WAS NOT INCOMPLIANCE WITH A 2011 UNDERTAKING FROM A PREVIOUS AWC FOR 18MONTHS AFTER THE FIRM REPRESENTED OTHERWISE TO FINRA AND THISFAILURE WAS A DIRECT RESULT OF A LACK OF AN ADEQUATESUPERVISORY SYSTEM TO ENSURE COMPLIANCE WITH REGULATORYUNDERTAKINGS. THE FINDINGS STATED THAT IN RESPONSE TO THE 2011UNDERTAKING, THE FIRM MADE THE DECISION TO LOWER ITS MAXIMUMSHARE QUANTITY (SOQ) CONTROLS AND SUBSEQUENTLY REPRESENTEDTO FINRA IN A LETTER THAT IT HAD IMPLEMENTED REVISED CONTROLSAND WRITTEN SUPERVISORY PROCEDURES (WSPS) TO ADDRESS THEDEFICIENCIES OUTLINED IN THE 2011 AWC. AS THE RESULT OF ANERRONEOUS ORDER ENTERED ON NASDAQ BY THE FIRM ANINVESTIGATION BEGAN AND IT WAS DISCOVERED THAT CONTRARY TOWRITTEN REPRESENTATIONS TO FINRA, THAT ALTHOUGH THE FIRM HADREVISED ITS WSPS BY FEBRUARY 16, 2012, IT FAILED TO REDUCE ITS SOQCONTROL IN ITS ORDER MANAGEMENT SYSTEM (FIDESSA) (THE SOQCONTROL) UNTIL AUGUST 30, 2013. THE FIRM DID NOT CHANGE THE SOQCONTROL BECAUSE THE EQUITIES DEPARTMENT DECIDED THATADDITIONAL DISCUSSION WAS NEEDED PRIOR TO MAKING THEREQUESTED CHANGE TO AVOID THE POSSIBILITY OF IMPAIRINGCUSTOMER TRADING. BOTH THE EQUITIES AND COMPLIANCEDEPARTMENTS KNEW OR SHOULD HAVE KNOWN, THE FIRM DID NOTCHANGE THE SOQ CONTROL IN RESPONSE TO THE 2011 UNDERTAKING.ADDITIONALLY, THERE WERE MULTIPLE INTERNAL COMMUNICATIONSINDICATING THAT THE EQUITIES DEPARTMENT HAD NOT LOWERED THESOQ CONTROL. THE FINDINGS ALSO STATED THAT IN TWO WRITTENRESPONSES TO FINRA INFORMATION REQUESTS, THE FIRM SUBMITTEDMISLEADING AND/OR INACCURATE RESPONSES RELATED TO ITSCOMPLIANCE WITH THE 2011 UNDERTAKING. UPON LEARNING OF THEFIRM'S NON-COMPLIANCE, CERTAIN LEGAL AND COMPLIANCE PERSONNELDISCUSSED THE NEED TO TELEPHONE FINRA AND REPORT THAT, WHILETHE FIRM HAD BEEN PROMPT IN UPDATING ITS WSPS IN COMPLIANCEWITH THE 2011 UNDERTAKING, THE SOQ CONTROLS HAD NOT BEENLOWERED. A CALL WITH FINRA WAS SCHEDULED BUT ULTIMATELY DIDNOT TAKE PLACE. THEREFORE, THE RESPONSES REMAINEDUNADDRESSED, AND THE FIRM'S FAILURE TO CORRECT PRIORMISSTATEMENTS PERSISTED UNTIL WHEN FINRA SOUGHT ADDITIONALINFORMATION FROM THE FIRM. THE FINDINGS ALSO INCLUDED THAT THEFIRM HAD A NUMBER OF PRE-TRADE CONTROLS DESIGNED TO PREVENTTHE ENTRY OF ERRONEOUS ORDERS. HOWEVER, THERE WERE SEVERALPRIMARY DEFICIENCIES WITH THE FIRM'S PRE-TRADE PRICE AND SIZECONTROLS. THE FIRM'S CONTROLS IN ITS FIDESSA SYSTEM CONSISTEDOF SOFT BLOCKS THAT COULD BE OVERRIDDEN BY THE FIRM'S TRADERS,CAUSING THEM TO BE INEFFECTIVE WITHOUT ADDITIONAL REASONABLECONTROLS. THE FIRM DID NOT HAVE REAL-TIME SUPERVISORY REVIEWSOF SOFT-BLOCK OVERRIDES OR AN APPROVAL PROCESS FOR SUCHOVERRIDES AND DID NOT CONDUCT A POST-TRADE REVIEW OFOVERRIDES, INCLUDING ON AN ANNUAL BASIS. ADDITIONALLY, THE FIRM'SWSPS DID NOT ADDRESS THE APPROPRIATE USE OF OVERRIDES, ANDTHE FIRM DID NOT CONDUCT ANY TRAINING RELATED TO THEAPPROPRIATE USE OF OVERRIDES. FINRA FOUND THAT THE FIRM DID NOTHAVE FIDESSA CONTROLS THAT TOOK INTO ACCOUNT THE INDIVIDUALTRADING CHARACTERISTICS OF A SECURITY, SUCH AS A PARTICULARSECURITIES LIQUIDITY AND/OR ADV. FURTHER, WHEN IT DID IMPLEMENTAN ADV CONTROL, THE PARAMETER WAS SET TOO HIGH TO BEEFFECTIVE AND WAS THEREFORE NOT REASONABLY DESIGNED, ABSENTADDITIONAL CONTROLS. THE FIRM FAILED TO ESTABLISH, DOCUMENT,AND MAINTAIN A REASONABLE SYSTEM FOR REGULARLY REVIEWING THEEFFECTIVENESS OF ITS RISK MANAGEMENT CONTROLS ANDSUPERVISORY PROCEDURES. FINRA ALSO FOUND THAT THE FIRMBUCKETED CLIENTS INTO CREDIT LIMIT TIERS ON A "CASE BY CASE"BASIS. THE FIRM FAILED TO MAINTAIN SUFFICIENT DOCUMENTATIONRELATED TO THE DUE DILIGENCE IT CONDUCTED IN ASSIGNING CLIENTSTO TIERS. ADDITIONALLY, THE FIRM DID NOT HAVE ANY CONTROLS THATADDRESSED HOW THE FIRM'S SYSTEM PREVENTED THE ENTRY OFORDERS THAT EXCEEDED APPROPRIATE CAPITAL THRESHOLDS FOR THEBROKER-DEALER.






Initiated By: NASDAQ STOCK MARKET







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT WAS NOT INCOMPLIANCE WITH A 2011 UNDERTAKING FROM A PREVIOUS AWC FOR 18MONTHS AFTER THE FIRM REPRESENTED OTHERWISE TO FINRA AND THISFAILURE WAS A DIRECT RESULT OF A LACK OF AN ADEQUATESUPERVISORY SYSTEM TO ENSURE COMPLIANCE WITH REGULATORYUNDERTAKINGS. THE FINDINGS STATED THAT IN RESPONSE TO THE 2011UNDERTAKING, THE FIRM MADE THE DECISION TO LOWER ITS MAXIMUMSHARE QUANTITY (SOQ) CONTROLS AND SUBSEQUENTLY REPRESENTEDTO FINRA IN A LETTER THAT IT HAD IMPLEMENTED REVISED CONTROLSAND WRITTEN SUPERVISORY PROCEDURES (WSPS) TO ADDRESS THEDEFICIENCIES OUTLINED IN THE 2011 AWC. AS THE RESULT OF ANERRONEOUS ORDER ENTERED ON NASDAQ BY THE FIRM ANINVESTIGATION BEGAN AND IT WAS DISCOVERED THAT CONTRARY TOWRITTEN REPRESENTATIONS TO FINRA, THAT ALTHOUGH THE FIRM HADREVISED ITS WSPS BY FEBRUARY 16, 2012, IT FAILED TO REDUCE ITS SOQCONTROL IN ITS ORDER MANAGEMENT SYSTEM (FIDESSA) (THE SOQCONTROL) UNTIL AUGUST 30, 2013. THE FIRM DID NOT CHANGE THE SOQCONTROL BECAUSE THE EQUITIES DEPARTMENT DECIDED THATADDITIONAL DISCUSSION WAS NEEDED PRIOR TO MAKING THEREQUESTED CHANGE TO AVOID THE POSSIBILITY OF IMPAIRINGCUSTOMER TRADING. BOTH THE EQUITIES AND COMPLIANCEDEPARTMENTS KNEW OR SHOULD HAVE KNOWN, THE FIRM DID NOTCHANGE THE SOQ CONTROL IN RESPONSE TO THE 2011 UNDERTAKING.ADDITIONALLY, THERE WERE MULTIPLE INTERNAL COMMUNICATIONSINDICATING THAT THE EQUITIES DEPARTMENT HAD NOT LOWERED THESOQ CONTROL. THE FINDINGS ALSO STATED THAT IN TWO WRITTENRESPONSES TO FINRA INFORMATION REQUESTS, THE FIRM SUBMITTEDMISLEADING AND/OR INACCURATE RESPONSES RELATED TO ITSCOMPLIANCE WITH THE 2011 UNDERTAKING. UPON LEARNING OF THEFIRM'S NON-COMPLIANCE, CERTAIN LEGAL AND COMPLIANCE PERSONNELDISCUSSED THE NEED TO TELEPHONE FINRA AND REPORT THAT, WHILETHE FIRM HAD BEEN PROMPT IN UPDATING ITS WSPS IN COMPLIANCEWITH THE 2011 UNDERTAKING, THE SOQ CONTROLS HAD NOT BEENLOWERED. A CALL WITH FINRA WAS SCHEDULED BUT ULTIMATELY DIDNOT TAKE PLACE. THEREFORE, THE RESPONSES REMAINEDUNADDRESSED, AND THE FIRM'S FAILURE TO CORRECT PRIORMISSTATEMENTS PERSISTED UNTIL WHEN FINRA SOUGHT ADDITIONALINFORMATION FROM THE FIRM. THE FINDINGS ALSO INCLUDED THAT THEFIRM HAD A NUMBER OF PRE-TRADE CONTROLS DESIGNED TO PREVENTTHE ENTRY OF ERRONEOUS ORDERS. HOWEVER, THERE WERE SEVERALPRIMARY DEFICIENCIES WITH THE FIRM'S PRE-TRADE PRICE AND SIZECONTROLS. THE FIRM'S CONTROLS IN ITS FIDESSA SYSTEM CONSISTEDOF SOFT BLOCKS THAT COULD BE OVERRIDDEN BY THE FIRM'S TRADERS,CAUSING THEM TO BE INEFFECTIVE WITHOUT ADDITIONAL REASONABLECONTROLS. THE FIRM DID NOT HAVE REAL-TIME SUPERVISORY REVIEWSOF SOFT-BLOCK OVERRIDES OR AN APPROVAL PROCESS FOR SUCHOVERRIDES AND DID NOT CONDUCT A POST-TRADE REVIEW OFOVERRIDES, INCLUDING ON AN ANNUAL BASIS. ADDITIONALLY, THE FIRM'SWSPS DID NOT ADDRESS THE APPROPRIATE USE OF OVERRIDES, ANDTHE FIRM DID NOT CONDUCT ANY TRAINING RELATED TO THEAPPROPRIATE USE OF OVERRIDES. FINRA FOUND THAT THE FIRM DID NOTHAVE FIDESSA CONTROLS THAT TOOK INTO ACCOUNT THE INDIVIDUALTRADING CHARACTERISTICS OF A SECURITY, SUCH AS A PARTICULARSECURITIES LIQUIDITY AND/OR ADV. FURTHER, WHEN IT DID IMPLEMENTAN ADV CONTROL, THE PARAMETER WAS SET TOO HIGH TO BEEFFECTIVE AND WAS THEREFORE NOT REASONABLY DESIGNED, ABSENTADDITIONAL CONTROLS. THE FIRM FAILED TO ESTABLISH, DOCUMENT,AND MAINTAIN A REASONABLE SYSTEM FOR REGULARLY REVIEWING THEEFFECTIVENESS OF ITS RISK MANAGEMENT CONTROLS ANDSUPERVISORY PROCEDURES. FINRA ALSO FOUND THAT THE FIRMBUCKETED CLIENTS INTO CREDIT LIMIT TIERS ON A "CASE BY CASE"BASIS. THE FIRM FAILED TO MAINTAIN SUFFICIENT DOCUMENTATIONRELATED TO THE DUE DILIGENCE IT CONDUCTED IN ASSIGNING CLIENTSTO TIERS. ADDITIONALLY, THE FIRM DID NOT HAVE ANY CONTROLS THATADDRESSED HOW THE FIRM'S SYSTEM PREVENTED THE ENTRY OFORDERS THAT EXCEEDED APPROPRIATE CAPITAL THRESHOLDS FOR THEBROKER-DEALER.


Resolution:

Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: THE FIRM WAS CENSURED, FINED $1,000,000 AND REQUIRED TO ADDRESSTHE SEC RULE 15C3-5 DEFICIENCIES DESCRIBED IN THIS AWC, ANDENSURE THAT IT HAS IMPLEMENTED CONTROLS AND PROCEDURES THATARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE RULESAND REGULATIONS CITED, INCLUDING THE IDENTIFICATION OF A SENIOREXECUTIVE RESPONSIBLE FOR ENSURING COMPLIANCE WITH THEUNDERTAKING. WITHIN 90 DAYS OF THE DATE OF THE ISSUANCE OF THISAWC, THE FIRM SHALL PROVIDE A WRITTEN REPORT PROVIDING AREFERENCE TO THIS MATTER; A REPRESENTATION THAT THE FIRM HASADDRESSED THE DEFICIENCIES DESCRIBED ABOVE; AND THE DATE THISWAS COMPLETED. BETWEEN 90 AND 120 DAYS AFTER THE SUBMISSIONOF THE WRITTEN REPORT, THE FIRM SHALL SUBMIT A SUPPLEMENTALWRITTEN REPORT TO FINRA TO PROVIDE AN UPDATE ON THEEFFECTIVENESS OF THE ENHANCEMENTS AND CHANGES MADE BY THEFIRM TO ITS RISK MANAGEMENT CONTROLS AND PROCEDURES ASDESCRIBE ABOVE.


No

Sanctions Ordered: CensureMonetary/Fine $1,000,000.00







THE FIRM WAS CENSURED, FINED $1,000,000 AND REQUIRED TO ADDRESSTHE SEC RULE 15C3-5 DEFICIENCIES DESCRIBED IN THIS AWC, ANDENSURE THAT IT HAS IMPLEMENTED CONTROLS AND PROCEDURES THATARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE RULESAND REGULATIONS CITED, INCLUDING THE IDENTIFICATION OF A SENIOREXECUTIVE RESPONSIBLE FOR ENSURING COMPLIANCE WITH THEUNDERTAKING. WITHIN 90 DAYS OF THE DATE OF THE ISSUANCE OF THISAWC, THE FIRM SHALL PROVIDE A WRITTEN REPORT PROVIDING AREFERENCE TO THIS MATTER; A REPRESENTATION THAT THE FIRM HASADDRESSED THE DEFICIENCIES DESCRIBED ABOVE; AND THE DATE THISWAS COMPLETED. BETWEEN 90 AND 120 DAYS AFTER THE SUBMISSIONOF THE WRITTEN REPORT, THE FIRM SHALL SUBMIT A SUPPLEMENTALWRITTEN REPORT TO FINRA TO PROVIDE AN UPDATE ON THEEFFECTIVENESS OF THE ENHANCEMENTS AND CHANGES MADE BY THEFIRM TO ITS RISK MANAGEMENT CONTROLS AND PROCEDURES ASDESCRIBE ABOVE.

Regulator Statement FINRA HAS TAKEN INTO CONSIDERATION THAT THE FIRM VOLUNTARILYENGAGED AN OUTSIDE CONSULTANT TO REVIEW AND MAKERECOMMENDATIONS TO ENHANCE CONTROLS AND PROCEDURES WITHRESPECT TO THE FIRM'S MARKET ACCESS CONTROLS AND RELATEDSUPERVISORY PROCEDURES FOR COMPLIANCE WITH SEC RULE 15C3-5.




Censure






Allegations: THE FIRM FAILED TO COMPLY WITH A 2011 UNDERTAKING IN RESPONSETO FINDINGS THAT IT HAD FAILED TO HAVE RISK MANAGEMENTCONTROLS IN PLACE TO PREVENT THE ENTRY OF ERRONEOUS ORDERSBY REJECTING ORDERS THAT EXCEEDED APPROPRIATE PRICE AND ORSIZE PARAMETERS. THE FIRM WAS NOT IN COMPLIANCE WITH THE 2011UNDERTAKING UNTIL AUGUST 2013 AND PROVIDED MISLEADING AND/ORINACCURATE INFORMATION TO FINRA REGARDING ITS COMPLIANCE WITHTHE 2011 UNDERTAKING. FURTHER, THE FIRM FAILED TO HAVEADEQUATE MARKET ACCESS CONTROLS AND RELATED SUPERVISORYPROCEDURES FOR COMPLIANCE WITH SEC RULE 15C3-5.



Resolution:

Other Sanctions Ordered: THE FIRM WAS CENSURED, FINED $1,000,000, REQUIRED TO ADDRESSSEC RULE 15C3-5 DEFICIENCIES AND ENSURE THAT CONTROLS AREIMPLEMENTED AND PROCEDURES ARE REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH MARKET ACCESS RULES, INCLUDING THEIDENTIFICATION OF A SENIOR EXECUTIVE RESPONSIBLE FOR ENSURINGCOMPLIANCE WITH THE UNDERTAKING. WITHIN 90 DAYS OF THE DATE OFTHE ISSUANCE OF THE AWC. FURTHER, THE FIRM IS REQUIRED TOPROVIDE A WRITTEN REPORT PROVIDING A REFERENCE TO THIS MATTER;A REPRESENTATION THAT THE FIRM HAS ADDRESSED THE DEFICIENCIESDESCRIBED ABOVE; AND THE DATE THIS WAS COMPLETED. BETWEEN 90AND 120 DAYS AFTER THE SUBMISSION OF THE WRITTEN REPORT, THEFIRM IS ALSO REQUIRED TO SUBMIT A SUPPLEMENTAL WRITTEN REPORTTO FINRA TO PROVIDE AN UPDATE ON THE EFFECTIVENESS OF THEENHANCEMENTS AND CHANGES MADE BY THE FIRM TO ITS RISKMANAGEMENT CONTROLS AND PROCEDURES.








THE FIRM WAS CENSURED, FINED $1,000,000, REQUIRED TO ADDRESSSEC RULE 15C3-5 DEFICIENCIES AND ENSURE THAT CONTROLS AREIMPLEMENTED AND PROCEDURES ARE REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH MARKET ACCESS RULES, INCLUDING THEIDENTIFICATION OF A SENIOR EXECUTIVE RESPONSIBLE FOR ENSURINGCOMPLIANCE WITH THE UNDERTAKING. WITHIN 90 DAYS OF THE DATE OFTHE ISSUANCE OF THE AWC. FURTHER, THE FIRM IS REQUIRED TOPROVIDE A WRITTEN REPORT PROVIDING A REFERENCE TO THIS MATTER;A REPRESENTATION THAT THE FIRM HAS ADDRESSED THE DEFICIENCIESDESCRIBED ABOVE; AND THE DATE THIS WAS COMPLETED. BETWEEN 90AND 120 DAYS AFTER THE SUBMISSION OF THE WRITTEN REPORT, THEFIRM IS ALSO REQUIRED TO SUBMIT A SUPPLEMENTAL WRITTEN REPORTTO FINRA TO PROVIDE AN UPDATE ON THE EFFECTIVENESS OF THEENHANCEMENTS AND CHANGES MADE BY THE FIRM TO ITS RISKMANAGEMENT CONTROLS AND PROCEDURES.


Firm Statement THE FIRM ENGAGED AN OUTSIDE CONSULTANT TO REVIEW AND MAKERECOMMENDATIONS TO ENHANCE CONTROLS AND PROCEDURES WITHRESPECT TO THE FIRM'S MARKET ACCESS CONTROLS AND RELATEDSUPERVISORY PROCEDURES FOR COMPLIANCE WITH SEC RULE 15C3-5.

Disclosure 22 of 85

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITTRANSMITTED TO THE ORDER AUDIT TRAIL SYSTEM (OATS) REPORTABLEORDER EVENTS (ROES) THAT CONTAINED INACCURATE, INCOMPLETE, ORIMPROPERLY FORMATTED DATA. THE FINDINGS STATED THATSPECIFICALLY, THE ROES CONTAINED INACCURATE FIRM ORDER ID(FOIDS). THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLESECURITIES LAWS AND REGULATIONS, AND THE RULES OF FINRA,CONCERNING THE ACCURACY OF ROES SUBMITTED TO OATS.SPECIFICALLY, THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDEWRITTEN SUPERVISORY PROCEDURES (WSPS) FOR PROVIDING FOR ASTATEMENT OF THE SUPERVISORY STEPS TO BE TAKEN BY THEIDENTIFIED PERSON TO ENSURE THAT THE FIRM'S ORDER IDS WEREACCURATE, AND THE FIRM'S OATS WSPS REQUIRED THE REVIEW OF ASMALL NUMBER OF OATS REPORTS TO DETERMINE WHETHER ORDEREVENTS WERE PROPERLY SEQUENCED. IN LIGHT OF THE OATSREPORTING OBLIGATIONS, THE SCOPE OF THE FIRM'S WSPS WAS NOTREASONABLY DESIGNED. THE FINDINGS ALSO INCLUDED THAT THE FIRM,AS A JOINT LEAD MANAGER OR SOLE MANAGER, FAILED TO REPORT NEWISSUE OFFERINGS IN, THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE), TRACE-ELIGIBLE AGENCY DEBT SECURITIES TO FINRA INACCORDANCE WITH THE TIME REQUIREMENTS SET FORTH IN FINRA RULE6760(C). FINRA FOUND THAT THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND THE RULES OF FINRA, CONCERNING THE TIMELINESSOF TRACE NEW ISSUE REPORTS SUBMITTED TO FINRA. SPECIFICALLY,THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDE WSPS FORPROVIDING FOR A STATEMENT OF THE SUPERVISORY STEPS TO BE TAKENBY THE IDENTIFIED PERSON TO ENSURE THAT THE FIRM'S TRACE NEWISSUE REPORTS WERE TIMELY SUBMITTED, AND DID NOT INCLUDE ASTATEMENT CONCERNING HOW FREQUENTLY THE SUPERVISORY STEPSWERE TO BE PERFORMED.







Initiated By: FINRA







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITTRANSMITTED TO THE ORDER AUDIT TRAIL SYSTEM (OATS) REPORTABLEORDER EVENTS (ROES) THAT CONTAINED INACCURATE, INCOMPLETE, ORIMPROPERLY FORMATTED DATA. THE FINDINGS STATED THATSPECIFICALLY, THE ROES CONTAINED INACCURATE FIRM ORDER ID(FOIDS). THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLESECURITIES LAWS AND REGULATIONS, AND THE RULES OF FINRA,CONCERNING THE ACCURACY OF ROES SUBMITTED TO OATS.SPECIFICALLY, THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDEWRITTEN SUPERVISORY PROCEDURES (WSPS) FOR PROVIDING FOR ASTATEMENT OF THE SUPERVISORY STEPS TO BE TAKEN BY THEIDENTIFIED PERSON TO ENSURE THAT THE FIRM'S ORDER IDS WEREACCURATE, AND THE FIRM'S OATS WSPS REQUIRED THE REVIEW OF ASMALL NUMBER OF OATS REPORTS TO DETERMINE WHETHER ORDEREVENTS WERE PROPERLY SEQUENCED. IN LIGHT OF THE OATSREPORTING OBLIGATIONS, THE SCOPE OF THE FIRM'S WSPS WAS NOTREASONABLY DESIGNED. THE FINDINGS ALSO INCLUDED THAT THE FIRM,AS A JOINT LEAD MANAGER OR SOLE MANAGER, FAILED TO REPORT NEWISSUE OFFERINGS IN, THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE), TRACE-ELIGIBLE AGENCY DEBT SECURITIES TO FINRA INACCORDANCE WITH THE TIME REQUIREMENTS SET FORTH IN FINRA RULE6760(C). FINRA FOUND THAT THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND THE RULES OF FINRA, CONCERNING THE TIMELINESSOF TRACE NEW ISSUE REPORTS SUBMITTED TO FINRA. SPECIFICALLY,THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDE WSPS FORPROVIDING FOR A STATEMENT OF THE SUPERVISORY STEPS TO BE TAKENBY THE IDENTIFIED PERSON TO ENSURE THAT THE FIRM'S TRACE NEWISSUE REPORTS WERE TIMELY SUBMITTED, AND DID NOT INCLUDE ASTATEMENT CONCERNING HOW FREQUENTLY THE SUPERVISORY STEPSWERE TO BE PERFORMED.


Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $195,000, AND REQUIRED TO REVISEITS WSPS. FINE PAID IN FULL ON JUNE 12, 2017.

Regulator Statement FINRA CASE # 20150452112 INCLUDED CASE #20150477104


No










Initiated By: FINRA







Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE FOLLOWING FINDINGS:

FIRM TRANSMITTED INACCURATE FIRM ORDER IDS TO OATS;

THE WSPS DID NOT APPROPRIATELY ADDRESS THE SUPERVISORY STEPSTO BE TAKEN TO ENSURE THAT THE FIRM'S ORDER IDS WERE ACCURATE;

FIRM FAILED TO REPORT NEW ISSUE OFFERINGS IN TRACE INACCORDANCE WITH RULE 6760(C);

THE WSPS DID NOT ADDRESS THE SUPERVISORY STEPS TO BE TAKEN TOENSURE THAT THE FIRM'S TRACE NEW ISSUE REPORTS WERE TIMELYSUBMITTED.



Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $195,000, AND REQUIRED TO REVISEITS WSPS. FINE PAID 06/12/2017.

Firm Statement FINRA CASE# 20150452112 INCLUDED CASE# 20150477104



Disclosure 23 of 85

i







Disclosure 23 of 85


Initiated By: FINRA





Principal Product Type: Debt - Corporate


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT TRANSACTIONS IN TRADE REPORTING AND COMPLIANCE ENGINE(TRACE)-ELIGIBLE CORPORATE DEBT SECURITIES TO TRACE WITHIN THETIMEFRAME REQUIRED BY FINRA RULE 6730(A).



Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $22,500. FINE PAID IN FULL ONSEPTEMBER 21, 2016.


No




Allegations: WITHOUT ADMITTING OR DENYING FINDINGS, THE FIRM CONSENTED TOTHE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT TRANSACTIONS IN TRADE REPORTING AND COMPLIANCEENGINE(TRACE)- ELIGIBLE CORPORATE DEBT SECURITIES TO TRACEWITHIN THE REQUIRED TIMEFRAME AS REQUIRED BY FINRA RULE 6730(A).








Initiated By: FINRA








Allegations: WITHOUT ADMITTING OR DENYING FINDINGS, THE FIRM CONSENTED TOTHE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT TRANSACTIONS IN TRADE REPORTING AND COMPLIANCEENGINE(TRACE)- ELIGIBLE CORPORATE DEBT SECURITIES TO TRACEWITHIN THE REQUIRED TIMEFRAME AS REQUIRED BY FINRA RULE 6730(A).


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $22,500.00.FINE PAID 9/21/16.

Firm Statement VIOLATION OF FINRA RULE 6730(A).



Disclosure 24 of 85

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Allegations: THE BUSINESS CONDUCT COMMITTEE ("COMMITTEE"), PURSUANT TORULE 960.2(F) OF THE RULES OF THE NASDAQ PHLX LLC ("EXCHANGERULES") AND UPON INFORMATION AND BELIEF, HEREBY AUTHORIZES THEISSUANCE OF THIS STATEMENT OF CHARGES AND ALLEGES.

ON FEBRUARY 20, 2014, AFTER RECEIVING A CUSTOMER SPREAD ORDERIN A CORPORATION'S OPTIONS TO PURCHASE 10,455 FEB 6 CALLS,PURCHASE 10,455 MAY 5 PUTS, AND SELL 10,455 MAY 7 CALLS BUTBEFORE EXPOSING IT TO A TRADING CROWD, THE FIRM ENTERED ANORDER TO PURCHASE, AND THEREAFTER RECEIVED A PARTIALEXECUTION OF 8,700 SHARES OF THE CORPORATION ON AN ORDER TOPURCHASE, 100,000 SHARES OF THE CORPORATION FOR ITSPROPRIETARY ACCOUNT TO HEDGE ITS ANTICIPATED FACILITATION OFTHE CUSTOMER'S ORDER. BY ENGAGING IN THE ACTS, PRACTICES ANDCONDUCT SET FORTH, THE FIRM VIOLATED EXCHANGE RULE 1064(D).ON FEBRUARY 20, 2014, RESPONDENT FAILED TO: (I) MAINTAIN, OR COULDNOT PROVIDE ANY EVIDENCE THAT IT MAINTAINED, AN ACCURATERECORD OF THE TIME IT HAD TRANSMITTED THE AFOREMENTIONEDCUSTOMER ORDER IN THE CORPORATION'S OPTIONS TO A FLOORBROKER FOR REPRESENTATION AND SUBSEQUENT EXECUTION IN ATRADING CROWD; AND (II) MAINTAIN AN ACCURATE RECORD OF THEORDER RECEIPT TIME OF THE CUSTOMER ORDER IN THE CORPORATION'SOPTIONS. BY ENGAGING IN THE ACTS, PRACTICES AND CONDUCT SETFORTH, THE FIRM VIOLATED RULE 17A-3(A)(6)(I) PROMULGATED UNDERTHE EXCHANGE ACT AND EXCHANGE RULE 760.ON FEBRUARY 20, 2014, THE FIRM FAILED TO: (I) MAINTAIN, ESTABLISHAND ENFORCE ADEQUATE WSPS AND AN ADEQUATE SUPERVISORYSYSTEM FOR REVIEWING, AND DOCUMENTING ITS REVIEW OF,TRANSACTIONS FOR ANTICIPATORY HEDGING ACTIVITY OR TRADING ONTHE BASIS OF MATERIAL, NONPUBLIC INFORMATION; (II) ADHERE, ANDFAILED TO SUPERVISE ITS EMPLOYEES TO ENSURE ADHERENCE, TO THEREQUIREMENT IN ITS WSPS TO CONFIRM PRIOR TO EXECUTION THATORDER TICKETS CAPTURED, AMONG OTHER THINGS, THE TIME AN ORDERIS TRANSMITTED FOR EXECUTION; AND (III) MAINTAIN AN ADEQUATESUPERVISORY SYSTEM FOR REVIEWING ELECTRONIC ORDERMEMORANDA THAT WAS REASONABLY CALCULATED TO DETECTERRONEOUS OR MISSING ORDER RECEIPT TIMES. BY ENGAGING IN THEACTS, PRACTICES AND CONDUCT, THE FIRM VIOLATED EXCHANGE RULE748(H).














THE BUSINESS CONDUCT COMMITTEE ("COMMITTEE"), PURSUANT TORULE 960.2(F) OF THE RULES OF THE NASDAQ PHLX LLC ("EXCHANGERULES") AND UPON INFORMATION AND BELIEF, HEREBY AUTHORIZES THEISSUANCE OF THIS STATEMENT OF CHARGES AND ALLEGES.

ON FEBRUARY 20, 2014, AFTER RECEIVING A CUSTOMER SPREAD ORDERIN A CORPORATION'S OPTIONS TO PURCHASE 10,455 FEB 6 CALLS,PURCHASE 10,455 MAY 5 PUTS, AND SELL 10,455 MAY 7 CALLS BUTBEFORE EXPOSING IT TO A TRADING CROWD, THE FIRM ENTERED ANORDER TO PURCHASE, AND THEREAFTER RECEIVED A PARTIALEXECUTION OF 8,700 SHARES OF THE CORPORATION ON AN ORDER TOPURCHASE, 100,000 SHARES OF THE CORPORATION FOR ITSPROPRIETARY ACCOUNT TO HEDGE ITS ANTICIPATED FACILITATION OFTHE CUSTOMER'S ORDER. BY ENGAGING IN THE ACTS, PRACTICES ANDCONDUCT SET FORTH, THE FIRM VIOLATED EXCHANGE RULE 1064(D).ON FEBRUARY 20, 2014, RESPONDENT FAILED TO: (I) MAINTAIN, OR COULDNOT PROVIDE ANY EVIDENCE THAT IT MAINTAINED, AN ACCURATERECORD OF THE TIME IT HAD TRANSMITTED THE AFOREMENTIONEDCUSTOMER ORDER IN THE CORPORATION'S OPTIONS TO A FLOORBROKER FOR REPRESENTATION AND SUBSEQUENT EXECUTION IN ATRADING CROWD; AND (II) MAINTAIN AN ACCURATE RECORD OF THEORDER RECEIPT TIME OF THE CUSTOMER ORDER IN THE CORPORATION'SOPTIONS. BY ENGAGING IN THE ACTS, PRACTICES AND CONDUCT SETFORTH, THE FIRM VIOLATED RULE 17A-3(A)(6)(I) PROMULGATED UNDERTHE EXCHANGE ACT AND EXCHANGE RULE 760.ON FEBRUARY 20, 2014, THE FIRM FAILED TO: (I) MAINTAIN, ESTABLISHAND ENFORCE ADEQUATE WSPS AND AN ADEQUATE SUPERVISORYSYSTEM FOR REVIEWING, AND DOCUMENTING ITS REVIEW OF,TRANSACTIONS FOR ANTICIPATORY HEDGING ACTIVITY OR TRADING ONTHE BASIS OF MATERIAL, NONPUBLIC INFORMATION; (II) ADHERE, ANDFAILED TO SUPERVISE ITS EMPLOYEES TO ENSURE ADHERENCE, TO THEREQUIREMENT IN ITS WSPS TO CONFIRM PRIOR TO EXECUTION THATORDER TICKETS CAPTURED, AMONG OTHER THINGS, THE TIME AN ORDERIS TRANSMITTED FOR EXECUTION; AND (III) MAINTAIN AN ADEQUATESUPERVISORY SYSTEM FOR REVIEWING ELECTRONIC ORDERMEMORANDA THAT WAS REASONABLY CALCULATED TO DETECTERRONEOUS OR MISSING ORDER RECEIPT TIMES. BY ENGAGING IN THEACTS, PRACTICES AND CONDUCT, THE FIRM VIOLATED EXCHANGE RULE748(H).


Resolution:


No

Decision







Sanction Details: THE FIRM IS CENSURED AND FINED $50,000.IF RESPONDENT FAILS TO PAY THE FINE WITHIN 30 CALENDAR DAYS OFTHE DATE OF THIS DECISION, OR FAILS TO COMPLY WITH ANY OTHERSANCTION BY THE DATE SET FORTH HEREIN, THE COMMITTEE SHALLDECLARE RESPONDENT TO BE IN MATERIAL BREACH OF ITS AGREEMENTAND MAY TAKE WHATEVER ACTIONS IT DEEMS NECESSARY TO RESPONDTO THE BREACH, INCLUDING, BUT NOT LIMITED TO, RESCINDING THISDECISION AND ALLOWING THE MATTER TO PROCEED IN ACCORDANCEWITH EXCHANGE RULES 960.1 THROUGH 960.12.

Regulator Statement THE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS, AND THE BUSINESS CONDUCT COMMITTEE("COMMITTEE") OF NASDAQ PHLX LLC (THE "EXCHANGE" OR "PHLX")RENDERED THE DECISION IN THE MATTER.RESPONDENT AGREES THAT THE DECISION TO BE ISSUED SHALL BEFINAL, AND WAIVES ANY RIGHT TO A REVIEW OF THE DECISION OR ANYOTHER PHASE OR ASPECT OF THIS PROCEEDING BY THE BOARD OFDIRECTORS OF THE EXCHANGE; BY THE U.S. SECURITIES AND EXCHANGECOMMISSION; BY ANY FEDERAL OR STATE COURT; OR IN ANY OTHERFORUM OR BY ANY OTHER MEANS.THE COMMITTEE ACCEPTS THE FOREGOING STIPULATION OF FACTS, ANDON THE BASIS THEREOF FINDS THAT RESPONDENT VIOLATED RULE 17A-3(A)(6)(I) PROMULGATED UNDER THE EXCHANGE ACT, AND EXCHANGERULES 1064(D), 707, 748(H), AND 760.

THE COMMITTEE BELIEVES THAT THE SANCTIONS PROPOSED BYRESPONDENT IN ITS OFFER SERVE THE PUBLIC INTEREST, ARESUFFICIENTLY REMEDIAL UNDER THE CIRCUMSTANCES, AND REPRESENTA PROPER DISCHARGE OF THE EXCHANGE'S REGULATORYRESPONSIBILITIES UNDER THE EXCHANGE ACT.(ASSOCIATED CASE PHLX ENFORCEMENT # 2016-09)


No



Allegations: ON FEBRUARY 20, 2014, THE FIRM: I)ENTERED AN ANTICIPATORY HEDGEPRIOR TO EXPOSING THE RELATED CUSTOMER OPTIONS ORDER TO ATRADING CROWD IN VIOLATION OF EXCHANGE RULES 1064(D) AND 707; II)FAILED TO MAINTAIN AN ACCURATE RECORD OF TIME OF RECEIPT,TRANSMISSION AND EXECUTION FOR THE AFOREMENTIONED ORDER INVIOLATION OF EXCHANGE ACT RULE 17A-3(A)(6)(I) AND EXCHANGE RULES760 AND 707; AND III) FAILED TO MAINTAIN, ESTABLISH AND ENFORCEADEQUATE WRITTEN SUPERVISORY PROCEDURES AND/OR AN ADEQUATESUPERVISORY SYSTEM REGARDING THE REVIEW OF ANTICIPATORYHEDGING TRANSACTIONS, THE ADHERENCE TO WSP REQUIREMENTSREGARDING THE CAPTURE OF ORDER TRANSMISSION TIMES, AND THEREVIEW OF ELECTRONIC ORDER MEMORANDA IN VIOLATION OFEXCHANGE RULES 748(H) AND 707.












Docket/Case Number: FINRA NO. 20140399298



Allegations: ON FEBRUARY 20, 2014, THE FIRM: I)ENTERED AN ANTICIPATORY HEDGEPRIOR TO EXPOSING THE RELATED CUSTOMER OPTIONS ORDER TO ATRADING CROWD IN VIOLATION OF EXCHANGE RULES 1064(D) AND 707; II)FAILED TO MAINTAIN AN ACCURATE RECORD OF TIME OF RECEIPT,TRANSMISSION AND EXECUTION FOR THE AFOREMENTIONED ORDER INVIOLATION OF EXCHANGE ACT RULE 17A-3(A)(6)(I) AND EXCHANGE RULES760 AND 707; AND III) FAILED TO MAINTAIN, ESTABLISH AND ENFORCEADEQUATE WRITTEN SUPERVISORY PROCEDURES AND/OR AN ADEQUATESUPERVISORY SYSTEM REGARDING THE REVIEW OF ANTICIPATORYHEDGING TRANSACTIONS, THE ADHERENCE TO WSP REQUIREMENTSREGARDING THE CAPTURE OF ORDER TRANSMISSION TIMES, AND THEREVIEW OF ELECTRONIC ORDER MEMORANDA IN VIOLATION OFEXCHANGE RULES 748(H) AND 707.


Resolution:


Sanction Details: PAYMENT FOR FINE WAS SCHEDULED TO BE DEDUCTED FROM FIRM'SNSCC ACCOUNT ON OR ABOUT 8/15/16.

Firm Statement PURSUANT TO AN OFFER OF SETTLEMENT EXECUTED WITH THE NASDAQPHLX LLC, THE FIRM CONSENTED TO FINDINGS THAT, ON FEBRUARY 20,2014, THE FIRM: I) ENTERED AN ANTICIPATORY HEDGE PRIOR TOEXPOSING THE RELATED CUSTOMER OPTIONS ORDER TO A TRADINGCROWD IN VIOLATION OF EXCHANGE RULES 1064(D) AND 707; II) FAILEDTO MAINTAIN AN ACCURATE RECORD OF TIME OF RECEIPT,TRANSMISSION AND EXECUTION FOR THE AFOREMENTIONED ORDER INVIOLATION OF EXCHANGE ACT RULE 17A-3(A)(6)(I) AND EXCHANGE RULES760 AND 707; AND III) FAILED TO MAINTAIN, ESTABLISH AND ENFORCEADEQUATE WRITTEN SUPERVISORY PROCEDURES AND/OR AN ADEQUATESUPERVISORY SYSTEM REGARDING THE REVIEW OF ANTICIPATORYHEDGING TRANSACTIONS, THE ADHERENCE TO WSP REQUIREMENTSREGARDING THE CAPTURE OF ORDER TRANSMISSION TIMES, AND THEREVIEW OF ELECTRONIC ORDER MEMORANDA IN VIOLATION OFEXCHANGE RULES 748(H) AND 707.


Decision






PURSUANT TO AN OFFER OF SETTLEMENT EXECUTED WITH THE NASDAQPHLX LLC, THE FIRM CONSENTED TO FINDINGS THAT, ON FEBRUARY 20,2014, THE FIRM: I) ENTERED AN ANTICIPATORY HEDGE PRIOR TOEXPOSING THE RELATED CUSTOMER OPTIONS ORDER TO A TRADINGCROWD IN VIOLATION OF EXCHANGE RULES 1064(D) AND 707; II) FAILEDTO MAINTAIN AN ACCURATE RECORD OF TIME OF RECEIPT,TRANSMISSION AND EXECUTION FOR THE AFOREMENTIONED ORDER INVIOLATION OF EXCHANGE ACT RULE 17A-3(A)(6)(I) AND EXCHANGE RULES760 AND 707; AND III) FAILED TO MAINTAIN, ESTABLISH AND ENFORCEADEQUATE WRITTEN SUPERVISORY PROCEDURES AND/OR AN ADEQUATESUPERVISORY SYSTEM REGARDING THE REVIEW OF ANTICIPATORYHEDGING TRANSACTIONS, THE ADHERENCE TO WSP REQUIREMENTSREGARDING THE CAPTURE OF ORDER TRANSMISSION TIMES, AND THEREVIEW OF ELECTRONIC ORDER MEMORANDA IN VIOLATION OFEXCHANGE RULES 748(H) AND 707.

Disclosure 25 of 85

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Initiated By: NEW YORK MERCANTILE EXCHANGE




NONE


Docket/Case Number: NYMEX 15-0220-BC

Principal Product Type: Commodity Option(s)


Allegations: JEFFERIES LLC BROKERED AN EFRP(EXCHANGE FOR RELATED PRODUCT)TRANSACTION ON NYMEX WHICH THE EXCHANGE FOUND TO HAVEVIOLATED EXCHANGE RULES BECAUSE THERE WAS NO CORRESPONDINGOTC POSITION AND IT DID NOT MEET THE MINIMUM SIZE REQUIREMENTSFOR A BLOCK TRADE.



Resolution:

Other Sanctions Ordered: NONE

Sanction Details: NONE

Firm Statement JEFFERIES LLC BROKERED AN EFRP(EXCHANGE FOR RELATED PRODUCT)TRANSACTION ON NYMEX WHICH THE EXCHANGE FOUND TO HAVEVIOLATED EXCHANGE RULES BECAUSE THERE WAS NO CORRESPONDINGOTC POSITION AND IT DID NOT MEET THE MINIMUM SIZE REQUIREMENTSFOR A BLOCK TRADE.


Settled

Disclosure 26 of 85

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Disclosure 26 of 85


Initiated By: FINRA


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT FORSETTLEMENT DATES JANUARY 15, 2010 THROUGH OCTOBER 14, 2011, THEFIRM REPORTED 112 SHORT INTEREST POSITIONS IN DUALLY LISTEDFOREIGN SECURITIES TOTALING 8,944,854 SHARES, WHEN IT SHOULDHAVE REPORTED 112 SHORT INTEREST POSITIONS TOTALING 55,007,028SHARES AND FOR SETTLEMENT DATES JANUARY 15, 2010 THROUGHOCTOBER 14, 2011, THE FIRM FAILED TO REPORT 1,382 SHORT INTERESTPOSITIONS IN DUALLY LISTED FOREIGN SECURITIES TOTALING 179,838,025SHARES. THE FINDINGS STATED THAT THE FIRM FAILED TO REPORT TOTHE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) THECORRECT CONTRA-PARTY'S IDENTIFIER FOR S1 TRANSACTIONS INTRACE-ELIGIBLE AGENCY DEBT SECURITIES. AS A JOINT LEAD MANAGEROR SOLE MANAGER, THE FIRM FAILED TO REPORT NEW ISSUEOFFERINGS IN TRACE-ELIGIBLE AGENCY DEBT SECURITIES TO FINRAACCORDING TO THE TIME FRAMES SET FORTH IN FINRA RULE 6760(C).THE FINDINGS ALSO STATED THAT THE FIRM REPORTED TO TRACE S1TRANSACTIONS IN CORPORATE DEBT SECURITIES WITH A REPORTEDTRADE EXECUTION TIME THAT WAS INACCURATE, FAILED TO REPORT IN ATIMELY MANNER S1 TRANSACTIONS IN TRACE-ELIGIBLE CORPORATEDEBT SECURITIES TO TRACE WITHIN 15 MINUTES OF EXECUTION ANDFAILED TO REPORT THE CORRECT EXECUTION TIME ON THE FIRM'SORDER MEMORANDA FOR THE S1 TRANSACTIONS. THE FIRM FAILED TOREPORT S1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBTSECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION TO TRACEAND FAILED TO REPORT S1 TRANSACTIONS IN AGENCY DEBT SECURITIESWITHIN 15 MINUTES OF THE TIME OF EXECUTION TO TRACE. THEFINDINGS ALSO INCLUDED THAT FOR SETTLEMENT DATES MARCH 14,2014 THROUGH AUGUST 29, 2014, THE FIRM REPORTED 3,439 SHORTINTEREST POSITIONS TOTALING 104,234,568 SHARES, WHEN IT SHOULDHAVE REPORTED 2,158 SHORT INTEREST POSITIONS TOTALING 28,441,522SHARES. FINRA FOUND THAT THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND FINRA RULES, CONCERNING THE FIRM'S SHORTINTEREST REPORTS AND THE ACCURACY OF EXECUTION TIMESREPORTED TO TRACE. THE FIRM DID NOT HAVE IN PLACE A SPECIFICREVIEW FOR INTER-DEALER TIME MISMATCHES.











Other Product Type(s): AGENCY DEBT SECURITIES


Resolution:

Other Sanctions Ordered: UNDERTAKING: REVISE THE FIRM'S SUPERVISORY PROCEDURES TOMONITOR EXECUTION TIMES REPORTED TO TRACE

Sanction Details: THE FIRM WAS CENSURED, FINED $235,000 AND UNDERTAKES TO REVISEITS SUPERVISORY PROCEDURES TO MONITOR EXECUTION TIMESREPORTED TO TRACE.FINE PAID IN FULL ON APRIL 8, 2016.


No




Initiated By: FINRA


Censure




Other Product Type(s): AGENCY DEBT SECURITIES

Allegations: VIOLATION OF TRACE AND SHORT INTEREST REPORTING RULES










FINE AND UNDERTAKING


Resolution:

Other Sanctions Ordered: UNDERTAKING: REVISE SUPERVISORY PROCEDURES TO MONITOREXECUTION TIMES REPORTED TO TRACE.


UNDERTAKING: REVISE SUPERVISORY PROCEDURES TO MONITOREXECUTION TIMES REPORTED TO TRACE.

Firm Statement ON MARCH 29, 2016, FINRA ACCEPTED THE FIRM'S AWC WHEREBY THEFIRM AGREED TO COLLECTIVELY SETTLE FIVE TRACE MATTERS AND TWOSHORT INTEREST REPORTING MATTERS FOR A $235,000 FINE, CENSUREAND A TRACE CENTRIC UNDERTAKING.



Disclosure 27 of 85

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Initiated By: ICE FUTURES U.S. INC.






Principal Product Type: Futures - Commodity


Allegations: VIOLATED RULE 4.02(K)(2)(C)



Resolution:



Decision







Sanction Details: FINE PAID IN 2015

Firm Statement VIOLATION OF EXCHANGE CROSS TRADES RULES

Disclosure 28 of 85

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Initiated By: CHICAGO BOARD OF TRADE





Docket/Case Number: CBOT 12-9069-BC



Allegations: VIOLATION OF RULES 526.A AND F



Resolution:



Firm Statement VIOLATION OF RULES 526 A AND F. FIRM EXECUTED BLOCK TRADES THATWERE NOT REPORTED WITHIN REQUISITE TIME FRAME. AGGREGATEDBLOCK ORDERS FOR ONE SIDE OF A BLOCK TRANSACTION FOR ADIFFERENT BENEFICIAL OWNER.


Decision

Disclosure 29 of 85

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Allegations: VIOLATION OF EXCHANGE RULES 526.F AND 536. EXECUTED BLOCKTRADES WERE NOT REPORTED TIMELY. MISREPORTED 2 SPREADTRANSACTIONS AS FOUR OUTRIGHT TRANSACTIONS.







Initiated By: COMEX





Docket/Case Number: COMEX14-9932-BC



VIOLATION OF EXCHANGE RULES 526.F AND 536. EXECUTED BLOCKTRADES WERE NOT REPORTED TIMELY. MISREPORTED 2 SPREADTRANSACTIONS AS FOUR OUTRIGHT TRANSACTIONS.


Resolution:



Firm Statement VIOLATION OF EXCHANGE RULES 526.F AND 536. EXECUTED BLOCKTRADES WERE NOT REPORTED TIMELY. MISREPORTED 2 SPREADTRANSACTIONS AS FOUR OUTRIGHT TRANSACTIONS.


Decision

Disclosure 30 of 85

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Initiated By: CHICAGO MERCANTILE EXCHANGE





Docket/Case Number: CME 14-9941-BC



Allegations: VIOLATION OF RULE 526 F. EXECUTED BLOCK TRADES WERE NOTREPORTED WITHIN IN THE REQUIRED TIME FRAME









Resolution:



Firm Statement VIOLATION OF RULE 526 F. EXECUTED BLOCK TRADES WERE NOTREPORTED WITHIN IN THE REQUIRED TIME FRAME AS REQUIRED.


Decision

Disclosure 31 of 85

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Initiated By: NYMEX




FINE


Docket/Case Number: NYMEX 14-9931



Allegations: VIOLATION OF BLOCK TRADE RULE 526.F



Resolution:

Other Sanctions Ordered: FINED

Sanction Details: FINED PAID IN 2015

Firm Statement EXECUTED BLOCK TRADES WERE NOT TIMELY REPORTED.MISREPORTED TRUE AND ACCURATE TIME OF EXECUTION


Decision

Disclosure 32 of 85

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Disclosure 32 of 85


Initiated By: INTERNATIONAL SECURITIES EXCHANGE, LLC


Other


AWC


Docket/Case Number: 2012-001 / 20120328704


Other Product Type(s): EQUITIES

Allegations: VIOLATION OF ISE RULE 400.02



Resolution:

Other Sanctions Ordered: NONE

Sanction Details: FINE PAID ON OR ABOUT JANUARY 23, 2014

Firm Statement ON OCTOBER 17, 2011, FIRM RECEIVED A CUSTOMER ORDER TO BUY 1500CALLS, AFTER EXECUTING 1000 CONTRACTS FIRM PURCHASED 5500SHARES OF THE SECURITY TO HEDGE THE FACILITATED PORTION OF THEORDER. PRIOR TO DISCLOSING THE REMAINING CONTRACTS TO THEMARKETPLACE, FIRM ALSO PURCHASED 189 CALLS FOR ITS PROPACCOUNT WHICH WAS EXECUTED TO HEDGE THE ANTICIPATEDFACILITATION OF THE REST OF THE ORDER.



Disclosure 33 of 85

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Allegations: SEC ADMIN RELEASES 33-10020; 34-77022; FEBRUARY 2, 2016: THESECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINSTJEFFERIES LLC ("RESPONDENT"). RESPONDENT WILLFULLY VIOLATEDSECTION 17(A)(2) OF THE SECURITIES ACT. THIS MATTER INVOLVESVIOLATIONS OF AN ANTIFRAUD PROVISION OF THE FEDERAL SECURITIESLAWS IN CONNECTION WITH RESPONDENT'S UNDERWRITING OF CERTAINMUNICIPAL SECURITIES OFFERINGS. RESPONDENT, A REGISTEREDBROKER-DEALER, CONDUCTED INADEQUATE DUE DILIGENCE IN CERTAINOFFERINGS AND AS A RESULT, FAILED TO FORM A REASONABLE BASISFOR BELIEVING THE TRUTHFULNESS OF CERTAIN MATERIALREPRESENTATIONS IN OFFICIAL STATEMENTS ISSUED IN CONNECTIONWITH THOSE OFFERINGS. THIS RESULTED IN RESPONDENT OFFERINGAND SELLING MUNICIPAL SECURITIES ON THE BASIS OF MATERIALLYMISLEADING DISCLOSURE DOCUMENTS. THE VIOLATIONS WERE SELF-REPORTED BY RESPONDENT TO THE COMMISSION PURSUANT TO THEDIVISION OF ENFORCEMENT'S (THE "DIVISION") MUNICIPALITIESCONTINUING DISCLOSURE COOPERATION (MCDC) INITIATIVE.












Principal Product Type: Debt - Municipal


SEC ADMIN RELEASES 33-10020; 34-77022; FEBRUARY 2, 2016: THESECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINSTJEFFERIES LLC ("RESPONDENT"). RESPONDENT WILLFULLY VIOLATEDSECTION 17(A)(2) OF THE SECURITIES ACT. THIS MATTER INVOLVESVIOLATIONS OF AN ANTIFRAUD PROVISION OF THE FEDERAL SECURITIESLAWS IN CONNECTION WITH RESPONDENT'S UNDERWRITING OF CERTAINMUNICIPAL SECURITIES OFFERINGS. RESPONDENT, A REGISTEREDBROKER-DEALER, CONDUCTED INADEQUATE DUE DILIGENCE IN CERTAINOFFERINGS AND AS A RESULT, FAILED TO FORM A REASONABLE BASISFOR BELIEVING THE TRUTHFULNESS OF CERTAIN MATERIALREPRESENTATIONS IN OFFICIAL STATEMENTS ISSUED IN CONNECTIONWITH THOSE OFFERINGS. THIS RESULTED IN RESPONDENT OFFERINGAND SELLING MUNICIPAL SECURITIES ON THE BASIS OF MATERIALLYMISLEADING DISCLOSURE DOCUMENTS. THE VIOLATIONS WERE SELF-REPORTED BY RESPONDENT TO THE COMMISSION PURSUANT TO THEDIVISION OF ENFORCEMENT'S (THE "DIVISION") MUNICIPALITIESCONTINUING DISCLOSURE COOPERATION (MCDC) INITIATIVE.


Resolution:


Sanction Details: THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION17(A)(2)OF THE SECURITIES ACT, PAY A CIVIL MONEY PENALTY IN THEAMOUNT OF $500,000 AND COMPLY WITH THE UNDERTAKINGSENUMERATED IN THE OFFER OF SETTLEMENT.


Yes

Sanctions Ordered: Monetary/Fine $500,000.00Cease and Desist/Injunction

Order





www.finra.org/brokercheck User GuidanceTHE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION17(A)(2)OF THE SECURITIES ACT, PAY A CIVIL MONEY PENALTY IN THEAMOUNT OF $500,000 AND COMPLY WITH THE UNDERTAKINGSENUMERATED IN THE OFFER OF SETTLEMENT.

Regulator Statement IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS,RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THEPURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGSBROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THECOMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THEFINDINGS, EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT ANDTHE SUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED,RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTINGADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TOSECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTION 15(B) OF THESECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSINGREMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER. IN VIEW OF THEFOREGOING, THE COMMISSION DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO INRESPONDENT'S OFFER. ACCORDINGLY, IT IS HEREBY ORDERED THATRESPONDENT SHALL, CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF 17(A)(2)OFTHE SECURITIES ACT; WITHIN TEN (10) DAYS OF THE ENTRY OF THISORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $500,000 TO THESECURITIES AND EXCHANGE COMMISSION; AND RETAIN AN INDEPENDENTCONSULTANT TO CONDUCT A REVIEW OF RESPONDENT'S POLICIES ANDPROCEDURES AS THEY RELATE TO MUNICIPAL SECURITIESUNDERWRITING DUE DILIGENCE.



Allegations: ON FEBRUARY 2, 2016, JEFFERIES LLC ("JEFFERIES") ENTERED INTO ASETTLEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION("SEC") PURSUANT TO THE SEC'S MUNICIPALITIES CONTINUINGDISCLOSURE COOPERATION ("MCDC") INITIATIVE RESULTING IN THE SECISSUING AN ORDER ("ORDER"). JEFFERIES CONSENTED TO THE ENTRYOF THE ORDER THAT FINDS THAT JEFFERIES, IN CONNECTION WITH ITSUNDERWRITING OF CERTAIN MUNICIPAL SECURITIES OFFERINGS,WILLFULLY VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT OF 1933.SPECIFICALLY, THE SEC FOUND THAT JEFFERIES ACTED AS EITHER ASENIOR OR SOLE UNDERWRITER IN CERTAIN MUNICIPAL SECURITIESOFFERINGS FOR WHICH OFFICIAL STATEMENTS INACCURATELYREPRESENTED MATERIAL COMPLIANCE WITH CONTINUING DISCLOSUREUNDERTAKINGS PURSUANT TO RULE 15C2-12








Cease and Desist


UNDERTAKINGCIVIL PENALTY


Docket/Case Number: ADMIN PROCEEDING FILE NO. 3-17088

Principal Product Type: Debt - Municipal



Resolution:


Sanction Details: THE ORDER REQUIRES JEFFERIES TO CEASE AND DESIST FROMCOMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONSOF SECTION 17(A)(2) OF THE SECURITIES ACT. ADDITIONALLY, THE ORDERREQUIRES JEFFERIES TO COMPLETE CERTAIN UNDERTAKINGS AND PAY A$500,000 CIVIL MONEY PENALTY, WHICH WAS PAID ON FEBRUARY 2, 2016

Firm Statement SOLELY FOR THE PURPOSE OF SETTLING THE PROCEEDINGS ANDWITHOUT ADMITTING OR DENYING THE FINDINGS, EXCEPT AS TO THESEC'S JURISDICTION OVER IT AND THE SUBJECT MATTER OF THEPROCEEDINGS, JEFFERIES CONSENTED TO THE ORDER. THE MCDCINITIATIVE WAS A VOLUNTARY INITIATIVE IN WHICH THE SECENCOURAGED MUNICIPAL ISSUERS AND UNDERWRITERS TO INVESTIGATEAND SELF-REPORT PRIOR COMPLIANCE WITH THE CONTINUINGDISCLOSURE OBLIGATIONS SPECIFIED IN RULE 15C2-12 UNDER THESECURITIES EXCHANGE ACT OF 1934. THE ALLEGATIONS, DISPOSITIONS,FINDINGS AND SANCTIONS OF THE ORDER ARE DESCRIBED ABOVE INITEMS 7 AND 12.

Sanctions Ordered: Monetary/Fine $500,000.00Cease and Desist/Injunction

Settled

Disclosure 34 of 85

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT DURING THEREVIEW PERIOD, IN APPROXIMATELY 3,708 INSTANCES, THE FIRMINACCURATELY REPORTED POSITIONS TO THE LARGE OPTIONS POSITIONREPORTING (LOPR) SYSTEM WITH THE WRONG EFFECTIVE DATE, INVIOLATION OF BOX RULE 3150. DURING THE REVIEW PERIOD, THE FIRMFAILED TO REPORT EQUITY HEDGE POSITIONS TO THE LOPR INAPPROXIMATELY 1,783 INSTANCES, IN VIOLATION OF BOX RULE 3150.DURING THE REVIEW PERIOD, IN APPROXIMATELY 574 INSTANCES, THEFIRM INACCURATELY REPORTED POSITIONS TO THE LOPR WITHOUT APROPER TAX IDENTIFICATION CODE, IN VIOLATION OF BOX RULE 3150. ONA SINGLE TRADE DATE DURING THE REVIEW PERIOD, IN ONE INSTANCE,THE FIRM OVER-REPORTED POSITIONS TO THE LOPR, IN VIOLATION OFBOX RULE 3150. DURING THE PERIOD BETWEEN MAY 14, 2012 ANDNOVEMBER 2015, THE FIRM FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM THAT WAS REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND BOX RULES, CONCERNING THE REPORTING OFPOSITIONS TO THE LOPR. IN ADDITION, THE FIRM'S SUPERVISORYSYSTEM DID NOT INCLUDE SUFFICIENT WSPS TO ENSURE THE PROPERREPORTING OF POSITIONS TO THE LOPR, INCLUDING A REVIEW OFREJECTED LOPR SUBMISSIONS, REPORTING OF HEDGE POSITIONS,REVIEWS FOR ACCOUNTS ACTING IN-CONCERT, AND ENSURING THATPOSITIONS WERE SUBMITTED WITH THE APPROPRIATE ADDRESS WHERETHE ACCOUNT IS DOMICILED, TAX TYPE AND TAX IDENTIFICATION DATA.THIS CONDUCT VIOLATED BOX RULE 3070.







Initiated By: BOX OPTIONS EXCHANGE LLC


Other


N/A





WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT DURING THEREVIEW PERIOD, IN APPROXIMATELY 3,708 INSTANCES, THE FIRMINACCURATELY REPORTED POSITIONS TO THE LARGE OPTIONS POSITIONREPORTING (LOPR) SYSTEM WITH THE WRONG EFFECTIVE DATE, INVIOLATION OF BOX RULE 3150. DURING THE REVIEW PERIOD, THE FIRMFAILED TO REPORT EQUITY HEDGE POSITIONS TO THE LOPR INAPPROXIMATELY 1,783 INSTANCES, IN VIOLATION OF BOX RULE 3150.DURING THE REVIEW PERIOD, IN APPROXIMATELY 574 INSTANCES, THEFIRM INACCURATELY REPORTED POSITIONS TO THE LOPR WITHOUT APROPER TAX IDENTIFICATION CODE, IN VIOLATION OF BOX RULE 3150. ONA SINGLE TRADE DATE DURING THE REVIEW PERIOD, IN ONE INSTANCE,THE FIRM OVER-REPORTED POSITIONS TO THE LOPR, IN VIOLATION OFBOX RULE 3150. DURING THE PERIOD BETWEEN MAY 14, 2012 ANDNOVEMBER 2015, THE FIRM FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM THAT WAS REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND BOX RULES, CONCERNING THE REPORTING OFPOSITIONS TO THE LOPR. IN ADDITION, THE FIRM'S SUPERVISORYSYSTEM DID NOT INCLUDE SUFFICIENT WSPS TO ENSURE THE PROPERREPORTING OF POSITIONS TO THE LOPR, INCLUDING A REVIEW OFREJECTED LOPR SUBMISSIONS, REPORTING OF HEDGE POSITIONS,REVIEWS FOR ACCOUNTS ACTING IN-CONCERT, AND ENSURING THATPOSITIONS WERE SUBMITTED WITH THE APPROPRIATE ADDRESS WHERETHE ACCOUNT IS DOMICILED, TAX TYPE AND TAX IDENTIFICATION DATA.THIS CONDUCT VIOLATED BOX RULE 3070.


Resolution:


No


Consent







Sanction Details: THE FIRM WAS CENSURED, FINED $10,000 AND UNDERTAKES TO ADDRESSTHE LOPR REPORTING DEFICIENCIES DESCRIBED ABOVE TO ENSURETHAT THE FIRM HAS IMPLEMENTED PROCEDURES THAT ARE REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH THE RULES ANDREGULATIONS CITED HEREIN.

Regulator Statement IN DETERMINING TO RESOLVE THIS MATTER, FINRA'S DEPARTMENT OFMARKET REGULATION TOOK INTO CONSIDERATION THE FACT THAT THEMAJORITY OF THE LOPR POSITIONS THAT WERE INACCURATELYREPORTED BY THE FIRM HAD EITHER A MINIMAL OR, IN CERTAININSTANCES, NO IMPACT ON THE ABILITY OF REGULATORY STAFF TOCONDUCT SURVEILLANCES FOR POTENTIAL VIOLATIONS OF SECURITIESLAWS.



Initiated By: BOX OPTIONS EXCHANGE


Censure


FINEUNDERTAKING





Allegations: VIOLATION OF BOX RULES 3150 AND 3070 FIRM INACCURATELY REPORTEDPOSITIONS TO LOPR. FIRM AGREED TO A SETTLEMENT WHICH INCLUDEDA FINE, CENSURE AND UNDERTAKING TO UPDATE LOPR PROCEDURES.



Resolution:

Other Sanctions Ordered: FIRM AGREED TO SETTLEMENT WHICH INCLUDED A FINE, CENSURE ANDAN UNDERTAKING TO UPDATE LOPR PROCEDURES.


Consent






Other Sanctions Ordered: FIRM AGREED TO SETTLEMENT WHICH INCLUDED A FINE, CENSURE ANDAN UNDERTAKING TO UPDATE LOPR PROCEDURES.

Sanction Details: FINED PAID 1/12/16

Firm Statement FIRM VIOLATED RULES 3150 AND 3070. FIRM INACCURATELY REPORTEDPOSITIONS TO LOPR. IN DETERMINING THIS MATTER MARKETREGULATION TOOK INTO CONSIDERATION THAT THE MAJORITY OF THELOPR POSITIONS THAT WERE INACCURATELY REPORTED HAD MINIMALOR NO IMPACT ON THE ABILITY OF REGULATORY STAFF TO CONDUCTSURVEILLANCE FOR POTENTIAL VIOLATIONS OF SECURITIES LAWS.

Disclosure 35 of 85

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Initiated By: NASDAQ OMX BX, INC.






Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT DURING THEREVIEW PERIOD, IN APPROXIMATELY 5,533 INSTANCES, THE FIRMINACCURATELY REPORTED POSITIONS TO THE LARGE OPTIONS POSITIONREPORTING (LOPR) SYSTEM WITH THE WRONG EFFECTIVE DATE, INAPPROXIMATELY 3,118 INSTANCES, THE FIRM INACCURATELY REPORTEDPOSITIONS TO THE LOPR WITHOUT A PROPER TAX IDENTIFICATION CODE,AND THE FIRM FAILED TO REPORT EQUITY HEDGE POSITIONS TO THELOPR IN APPROXIMATELY 2,518 INSTANCES. THIS CONDUCT VIOLATEDBOX RULES, CHAPTER III, SEC. 10. THE FINDINGS STATED THAT THE FIRMFAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM THAT WASREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE SECURITIES LAWS AND REGULATIONS, AND BOX RULES,CONCERNING THE REPORTING OF POSITIONS TO THE LOPR. IN ADDITION,THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDE SUFFICIENTWRITTEN SUPERVISORY PROCEDURES TO ENSURE THE PROPERREPORTING OF POSITIONS TO THE LOPR, INCLUDING A REVIEW OFREJECTED LOPR SUBMISSIONS, REPORTING OF HEDGE POSITIONS,REVIEWS FOR ACCOUNTS ACTING IN-CONCERT, AND ENSURING THATPOSITIONS WERE SUBMITTED WITH THE APPROPRIATE ADDRESS WHERETHE ACCOUNT IS DOMICILED, TAX TYPE AND TAX IDENTIFICATION DATA.THIS CONDUCT VIOLATED BOX RULES, CHAPTER III, SEC. 2(A)(I).










Resolution:

Other Sanctions Ordered: UNDERTAKING: ADDRESS THE LOPR REPORTING DEFICIENCIESDESCRIBED ABOVE TO ENSURE THAT THE FIRM HAS IMPLEMENTEDPROCEDURES THAT ARE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE RULES AND REGULATIONS CITED HEREIN

Sanction Details: THE FIRM WAS CENSURED, FINED $17,500 AND UNDERTAKES TO ADDRESSTHE LOPR REPORTING DEFICIENCIES DESCRIBED ABOVE TO ENSURETHAT THE FIRM HAS IMPLEMENTED PROCEDURES THAT ARE REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH THE RULES ANDREGULATIONS CITED HEREIN.

Regulator Statement IN DETERMINING TO RESOLVE THIS MATTER ON THE BASIS SET FORTHHEREIN, FINRA'S DEPARTMENT OF MARKET REGULATION TOOK INTOCONSIDERATION THE FACT THAT THE MAJORITY OF THE LOPR POSITIONSTHAT WERE INACCURATELY REPORTED BY THE FIRM HAD EITHER AMINIMAL OR, IN CERTAIN INSTANCES, NO IMPACT ON THE ABILITY OFREGULATORY STAFF TO CONDUCT SURVEILLANCES FOR POTENTIALVIOLATIONS OF SECURITIES LAWS.


No





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT DURING THEREVIEW PERIOD, THE FIRM INACCURATELY REPORTED POSITIONS TOTHE LOPR SYSTEM AND DID NOT ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM OR PROCEDURES FOR LOPR REPORTING.









Censure


FINE






Resolution:

Other Sanctions Ordered: UNDERTAKINGTO ADDRESS THE LOPR REPORTING DEFICIENCIES DESCRIBED ABOVE TOENSURE THAT THE FIRM HAS IMPLEMENTED PROCEDURES THAT AREREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE RULES ANDREGULATIONS

Sanction Details: THE FIRM WAS CENSURED, FINED $17,500 AND UNDERTAKES TO ADDRESSTHE LOPR REPORTING DEFICIENCIES AS DESCRIBED ABOVE

Firm Statement FINRA'S DEPARTMENT OF MARKET REGULATION TOOK INTOCONSIDERATION THE FACT THAT THE MAJORITY OF THE LOPR POSITIONSTHAT WERE INACCURATELY REPORTED BY THE FIRM HAD EITHER AMINIMAL OR, IN CERTAIN INSTANCES, NO IMPACT ON THE ABILITY OFREGULATORY STAFF TO CONDUCT SURVEILLANCES FOR POTENTIALVIOLATIONS OF SECURITIES LAWS.



Disclosure 36 of 85

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Allegations: JEFFERIES LLC ("JEFFERIES"), AN EXCHANGE TPH ORGANIZATION, WASCENSURED AND FINED $5,000 FOR: (I) FAILING TO REGISTER ONE (1)ASSOCIATED PERSON AS A PROPRIETARY TRADER PRINCIPAL (TP) WITHTHE EXCHANGE IN WEBCRD; AND (II) FAILING TO REGISTER ONE (1)ASSOCIATED PERSON AS A PROPRIETARY TRADER (PT) WITH THEEXCHANGE IN WEBCRD. (EXCHANGE RULE 3.6A - QUALIFICATION ANDREGISTRATION OF TRADING PERMIT HOLDERS AND ASSOCIATEDPERSONS)







Initiated By: CHICAGO BOARD OPTIONS EXCHANGE





Docket/Case Number: 15-0069/ 20150459458



JEFFERIES LLC ("JEFFERIES"), AN EXCHANGE TPH ORGANIZATION, WASCENSURED AND FINED $5,000 FOR: (I) FAILING TO REGISTER ONE (1)ASSOCIATED PERSON AS A PROPRIETARY TRADER PRINCIPAL (TP) WITHTHE EXCHANGE IN WEBCRD; AND (II) FAILING TO REGISTER ONE (1)ASSOCIATED PERSON AS A PROPRIETARY TRADER (PT) WITH THEEXCHANGE IN WEBCRD. (EXCHANGE RULE 3.6A - QUALIFICATION ANDREGISTRATION OF TRADING PERMIT HOLDERS AND ASSOCIATEDPERSONS)


Resolution:


Sanction Details: A $5,000 FINE AND A CENSURE.


Consent


Initiated By: CBOE


Censure






Allegations: VIOLATION OF EXCHANGE RULE 3.6A.











Sanction Details: CENSURE AND FINEFINED PAID 11/13/15

Firm Statement VIOLATION OF EXCHANGE RULE 3.6A. FIRM DID NOT MAKE REQUISITEREGISTRATION FILINGS FOR 2 INDIVIDUALS THAT HELD THE PROPEREXAM QUALFICATIONS.


Disclosure 37 of 85

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Initiated By: FINRA






Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ACOMBINATION OF A TRANSITION TO A NEW EMAIL SYSTEM, TOGETHERWITH CHANGES DEPLOYED IN THE FIRM'S EMAIL REVIEW PLATFORM,CAUSED SYSTEM DELAYS THAT IMPAIRED THE FIRM'S ABILITY TO REVIEWCORRESPONDENCE SENT TO OR FROM THE U.S. EQUITIES RESEARCHDEPARTMENT. THE FINDINGS STATED THAT WHILE THE FIRM LEARNED OFTHE SYSTEM DELAYS AS EARLY AS NOVEMBER 4, 2011, IT DID NOT FULLYRESOLVE THE ISSUE UNTIL JUNE 21, 2012. DURING THE EMAIL VIOLATIONPERIOD, THE FIRM FAILED TO REVIEW NEARLY 49 PERCENT OF THOSEEMAILS IN THE U.S. EQUITIES RESEARCH DEPARTMENT THAT WEREFLAGGED FOR REVIEW AS PART OF ITS SUPERVISION OF ELECTRONICCORRESPONDENCE. THE FINDINGS ALSO STATED THAT THE FIRM FAILEDTO TIMELY FILE MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB)RULE G-32 SUBMISSIONS, FILED RULE G-32 SUBMISSIONS WITHINACCURATE INFORMATION AND FAILED TO FILE ONE REQUIRED NOTICEIN CONNECTION WITH AN EXEMPT LIMITED OFFERING. THE FIRM'S LATESUBMISSIONS WERE NEARLY FOUR DAYS LATE ON AVERAGE. NEARLY ALLOF THE LATE SUBMISSIONS WERE LATE BY ONE WEEK OR LESS.











Resolution:


Sanction Details: SEE ABOVE

Regulator Statement FINE PAID IN FULL ON SEPTEMBER 17, 2014.


No




Initiated By: FINRA





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES LLCCONSENTED TO FINDINGS RELATING TO THE REVIEW OF ELECTRONICCORRESPONDENCE AND MSRB RULE G-32 SUBMISSIONS. AS A RESULTOF A SYSTEM DELAY, THE FIRM DID NOT TIMELY REVIEW CERTAINELECTRONIC CORRESPONDENCE SENT TO OR FROM THE U.S. EQUITIESRESEARCH DEPARTMENT FROM NOVEMBER 4, 2011 THROUGH JUNE 21,2012. WITH RESPECT TO THE MSRB FINDING, BETWEEN SEPTEMBER 2010AND OCTOBER 2013, THE FIRM DID NOT TIMELY FILE CERTAIN MSRB G-32SUBMISSIONS, FILED CERTAIN G-32 SUBMISSIONS WITH INACCURATEINFORMATION, AND IN ONE INSTANCE, FAILED TO FILE ONE REQUIREDNOTICE IN CONNECTION WITH AN EXEMPT LIMITED OFFERING.









Censure


CENSURE AND FINE.



Resolution:


Sanction Details: A CENSURE AND A FINE IN THE AMOUNT OF $55,000. $25,000 OF WHICHPERTAINS TO THE VIOLATIONS OF MSRB RULE G-32.



Disclosure 38 of 85

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Allegations: SEC ADMIN RELEASE 34-71695/MARCH 12, 2014: THE SECURITIES ANDEXCHANGE COMMISSION (COMMISSION) DEEMS IT APPROPRIATE AND INTHE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE,AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B)(4) OF THESECURITIES EXCHANGE ACT OF 1934 (EXCHANGE ACT) AGAINSTJEFFERIES LLC. THE FIRM FAILED REASONABLY TO SUPERVISE AREPRESENTATIVE AND CERTAIN OTHER REPRESENTATIVES ON THEFIRM'S MORTGAGE-BACKED SECURITIES (MBS) DESK WITH A VIEW TOPREVENTING AND DETECTING THEIR VIOLATIONS OF THE FEDERALSECURITIES LAWS DURING THE TIME PERIOD FROM 2009 TO 2011. AMONGTHE REPRESENTATIVE'S AND THE OTHER REPRESENTATIVES' JOBRESPONSIBILITIES DURING THIS TIME WAS TO TRADE RESIDENTIAL MBS(RMBS) ON A PRINCIPAL BASIS WITH COUNTERPARTIES. IN DOING SO, THEREPRESENTATIVE AND OTHER REPRESENTATIVES OF THE FIRM WOULDPURCHASE RMBS FROM ONE CUSTOMER AND SELL THE SAME RMBS TOANOTHER CUSTOMER ON THE SAME DAY (INTRA-DAY TRADES). THEREPRESENTATIVE AND OTHERS ON THE MBS DESK WOULD ALSOPURCHASE RMBS, HOLD THEM IN INVENTORY AND SELL THEM TOANOTHER CUSTOMER AT A LATER DATE (INVENTORY TRADES). FROM 2009TO 2011, THE REPRESENTATIVE AND CERTAIN OTHER REPRESENTATIVESLIED TO, OR OTHERWISE MISLED, CUSTOMERS ABOUT THE PRICE ATWHICH THE FIRM HAD BOUGHT RMBS AND CONSEQUENTLY THE AMOUNTOF THE FIRM'S PROFIT ON THE TRADES. THIS MISCONDUCT DECEIVEDCUSTOMERS ABOUT THE PRICE AT WHICH THE FIRM HAD RECENTLYACQUIRED THE RMBS. THE FIRM'S IMPLEMENTATION OF ITSSUPERVISORY PROCEDURES RELATING TO REVIEW OF ITS MBS DESKREPRESENTATIVES' ELECTRONIC COMMUNICATIONS WITH CUSTOMERSWAS INADEQUATE TO PREVENT AND DETECT THESEMISREPRESENTATIONS TO CUSTOMERS. THE REPRESENTATIVE ENGAGEDIN CONDUCT THAT VIOLATED SECTION 17(A) OF THE SECURITIES ACT OF1933 AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5THEREUNDER. OTHER REPRESENTATIVES ON THE FIRM'S MBS DESKENGAGED IN CONDUCT THAT VIOLATED SECTION 17(A)(2) OF THESECURITIES ACT OF 1933. THE FIRM FAILED REASONABLY TO SUPERVISETHE REPRESENTATIVE AND THE OTHER REPRESENTATIVES ON ITS MBSDESK FOR PURPOSES OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACTBECAUSE THE FIRM FAILED TO IMPLEMENT ITS PROCEDURESREGARDING REVIEW OF CUSTOMER CORRESPONDENCE IN A MANNERTHAT WOULD REASONABLY BE EXPECTED TO PREVENT AND DETECT THEVIOLATIONS BY THE REPRESENTATIVES.









Other


N/A





SEC ADMIN RELEASE 34-71695/MARCH 12, 2014: THE SECURITIES ANDEXCHANGE COMMISSION (COMMISSION) DEEMS IT APPROPRIATE AND INTHE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE,AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B)(4) OF THESECURITIES EXCHANGE ACT OF 1934 (EXCHANGE ACT) AGAINSTJEFFERIES LLC. THE FIRM FAILED REASONABLY TO SUPERVISE AREPRESENTATIVE AND CERTAIN OTHER REPRESENTATIVES ON THEFIRM'S MORTGAGE-BACKED SECURITIES (MBS) DESK WITH A VIEW TOPREVENTING AND DETECTING THEIR VIOLATIONS OF THE FEDERALSECURITIES LAWS DURING THE TIME PERIOD FROM 2009 TO 2011. AMONGTHE REPRESENTATIVE'S AND THE OTHER REPRESENTATIVES' JOBRESPONSIBILITIES DURING THIS TIME WAS TO TRADE RESIDENTIAL MBS(RMBS) ON A PRINCIPAL BASIS WITH COUNTERPARTIES. IN DOING SO, THEREPRESENTATIVE AND OTHER REPRESENTATIVES OF THE FIRM WOULDPURCHASE RMBS FROM ONE CUSTOMER AND SELL THE SAME RMBS TOANOTHER CUSTOMER ON THE SAME DAY (INTRA-DAY TRADES). THEREPRESENTATIVE AND OTHERS ON THE MBS DESK WOULD ALSOPURCHASE RMBS, HOLD THEM IN INVENTORY AND SELL THEM TOANOTHER CUSTOMER AT A LATER DATE (INVENTORY TRADES). FROM 2009TO 2011, THE REPRESENTATIVE AND CERTAIN OTHER REPRESENTATIVESLIED TO, OR OTHERWISE MISLED, CUSTOMERS ABOUT THE PRICE ATWHICH THE FIRM HAD BOUGHT RMBS AND CONSEQUENTLY THE AMOUNTOF THE FIRM'S PROFIT ON THE TRADES. THIS MISCONDUCT DECEIVEDCUSTOMERS ABOUT THE PRICE AT WHICH THE FIRM HAD RECENTLYACQUIRED THE RMBS. THE FIRM'S IMPLEMENTATION OF ITSSUPERVISORY PROCEDURES RELATING TO REVIEW OF ITS MBS DESKREPRESENTATIVES' ELECTRONIC COMMUNICATIONS WITH CUSTOMERSWAS INADEQUATE TO PREVENT AND DETECT THESEMISREPRESENTATIONS TO CUSTOMERS. THE REPRESENTATIVE ENGAGEDIN CONDUCT THAT VIOLATED SECTION 17(A) OF THE SECURITIES ACT OF1933 AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5THEREUNDER. OTHER REPRESENTATIVES ON THE FIRM'S MBS DESKENGAGED IN CONDUCT THAT VIOLATED SECTION 17(A)(2) OF THESECURITIES ACT OF 1933. THE FIRM FAILED REASONABLY TO SUPERVISETHE REPRESENTATIVE AND THE OTHER REPRESENTATIVES ON ITS MBSDESK FOR PURPOSES OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACTBECAUSE THE FIRM FAILED TO IMPLEMENT ITS PROCEDURESREGARDING REVIEW OF CUSTOMER CORRESPONDENCE IN A MANNERTHAT WOULD REASONABLY BE EXPECTED TO PREVENT AND DETECT THEVIOLATIONS BY THE REPRESENTATIVES.


Resolution:

Other Sanctions Ordered: UNDERTAKINGS; PREJUDGMENT INTEREST

Sanction Details: IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, THEFIRM HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. THE FIRM ADMITS TO THEFACTS AND THE COMMISSION'S JURISDICTION OVER IT AND THE SUBJECTMATTER OF THESE PROCEEDINGS, AND CONSENTS TO THE ENTRY OFTHIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TOSECTION 15(B)(4) OF THE EXCHANGE ACT, MAKING FINDINGS, ANDIMPOSING REMEDIAL SANCTIONS. IN DETERMINING TO ACCEPT THEFIRM'S OFFER, THE COMMISSION CONSIDERED THE REMEDIAL ACTSUNDERTAKEN BY THE FIRM REGARDING ITS SUPERVISORY SYSTEM,INCLUDING, AMONG OTHER THINGS, THE IMPLEMENTATION OF TARGETEDRISK-BASED SURVEILLANCE TO SUPPLEMENT THE PREVIOUSPROCEDURES FOR REVIEWING ELECTRONIC COMMUNICATIONS. THECOMMISSION ALSO CONSIDERED THE FIRM'S VOLUNTARY DISCLOSURESCONCERNING THIS MATTER AND THE COOPERATION AFFORDED THECOMMISSION STAFF IN ITS INVESTIGATION OF THIS MATTER. IN VIEW OFTHE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATE TO IMPOSETHE SANCTIONS AGREED TO IN THE FIRM'S OFFER. ACCORDINGLY, IT ISHEREBY ORDERED THAT: PURSUANT TO SECTION 15(B)(4) OF THEEXCHANGE ACT, THE FIRM IS HEREBY CENSURED. THE FIRM SHALL PAYDISGORGEMENT OF $4,200,402 AND PREJUDGMENT INTEREST OF $292,515TO THE COMMISSION. THE FIRM SHALL, WITHIN 10 DAYS OF THE ENTRYOF THIS ORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF$4,200,402 TO THE UNITED STATES TREASURY. THE FIRM SHALL COMPLYWITH THE UNDERTAKINGS THAT IT SHALL RETAIN, WITHIN 30 DAYS OF THEDATE OF THE ISSUANCE OF THIS ORDER, THE SERVICES OF ANINDEPENDENT COMPLIANCE CONSULTANT NOT UNACCEPTABLE TO THESTAFF OF THE COMMISSION. [CONTINUED IN COMMENT]


Yes


Order






Sanction Details: IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, THEFIRM HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. THE FIRM ADMITS TO THEFACTS AND THE COMMISSION'S JURISDICTION OVER IT AND THE SUBJECTMATTER OF THESE PROCEEDINGS, AND CONSENTS TO THE ENTRY OFTHIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TOSECTION 15(B)(4) OF THE EXCHANGE ACT, MAKING FINDINGS, ANDIMPOSING REMEDIAL SANCTIONS. IN DETERMINING TO ACCEPT THEFIRM'S OFFER, THE COMMISSION CONSIDERED THE REMEDIAL ACTSUNDERTAKEN BY THE FIRM REGARDING ITS SUPERVISORY SYSTEM,INCLUDING, AMONG OTHER THINGS, THE IMPLEMENTATION OF TARGETEDRISK-BASED SURVEILLANCE TO SUPPLEMENT THE PREVIOUSPROCEDURES FOR REVIEWING ELECTRONIC COMMUNICATIONS. THECOMMISSION ALSO CONSIDERED THE FIRM'S VOLUNTARY DISCLOSURESCONCERNING THIS MATTER AND THE COOPERATION AFFORDED THECOMMISSION STAFF IN ITS INVESTIGATION OF THIS MATTER. IN VIEW OFTHE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATE TO IMPOSETHE SANCTIONS AGREED TO IN THE FIRM'S OFFER. ACCORDINGLY, IT ISHEREBY ORDERED THAT: PURSUANT TO SECTION 15(B)(4) OF THEEXCHANGE ACT, THE FIRM IS HEREBY CENSURED. THE FIRM SHALL PAYDISGORGEMENT OF $4,200,402 AND PREJUDGMENT INTEREST OF $292,515TO THE COMMISSION. THE FIRM SHALL, WITHIN 10 DAYS OF THE ENTRYOF THIS ORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF$4,200,402 TO THE UNITED STATES TREASURY. THE FIRM SHALL COMPLYWITH THE UNDERTAKINGS THAT IT SHALL RETAIN, WITHIN 30 DAYS OF THEDATE OF THE ISSUANCE OF THIS ORDER, THE SERVICES OF ANINDEPENDENT COMPLIANCE CONSULTANT NOT UNACCEPTABLE TO THESTAFF OF THE COMMISSION. [CONTINUED IN COMMENT]

Regulator Statement [CONTINUED FROM SANCTION DETAIL] THE FIRM SHALL REQUIRE THECONSULTANT TO CONDUCT A REVIEW OF ANY AND ALL POLICIES ANDPROCEDURES DEEMED RELEVANT BY THE CONSULTANT TO PREVENTINGAND DETECTING FRAUD ON THE MBS DESK (AND ANY OTHER FIXEDINCOME DESK THE CONSULTANT DETERMINES IS SUSCEPTIBLE TO THESAME MISCONDUCT DESCRIBED IN THIS ORDER) INCLUDING, BUT NOTLIMITED TO, THE POLICIES AND PROCEDURES RELATING TO THESUPERVISORY REVIEW OF EMPLOYEES' ELECTRONIC COMMUNICATIONS.


Allegations: THE SEC'S ADMINISTRATIVE ORDER ("ORDER") FOUND THAT JEFFERIESFAILED REASONABLY TO SUPERVISE FORMER REPRESENTATIVE JESSE C.LITVAK ("LITVAK") AND CERTAIN OTHER REPRESENTATIVES ON JEFFERIES'MORTGAGE-BACKED SECURITIES ("MBS") DESK WITH A VIEW TOPREVENTING AND DETECTING THEIR VIOLATIONS OF THE FEDERALSECURITIES LAWS DURING THE TIME PERIOD FROM 2009 TO 2011. LITVAKWAS A MANAGING DIRECTOR AND SENIOR TRADER OF RESIDENTIAL MBS("RMBS"). THE ORDER FOUND THAT, IN CONNECTION WITH INVENTORYAND INTRA-DAY PRINCIPAL TRADES IN RMBS WITH COUNTERPARTIESFROM 2009 TO 2011, LITVAK AND CERTAIN OTHER REPRESENTATIVES LIEDTO, OR OTHERWISE MISLED, CUSTOMERS ABOUT THE PRICE AT WHICHJEFFERIES HAD BOUGHT RMBS AND CONSEQUENTLY THE AMOUNT OFTHE FIRM'S PROFIT ON THE TRADES. THE ORDER FURTHER FOUND THATTHIS MISCONDUCT DECEIVED CUSTOMERS ABOUT THE PRICE AT WHICHJEFFERIES HAD RECENTLY ACQUIRED THE RMBS AND THAT JEFFERIES'IMPLEMENTATION OF ITS SUPERVISORY PROCEDURES RELATING TOREVIEW OF ITS MBS DESK REPRESENTATIVES' ELECTRONICCOMMUNICATIONS WITH CUSTOMERS WAS INADEQUATE TO PREVENTAND DETECT THESE MISREPRESENTATIONS TO CUSTOMERS INVIOLATION OF EXCHANGE ACT SECTION 15(B)(4)(E).









Censure


CIVIL AND ADMINISTRATIVE PENALTY(IES)/FINE(S), INDEPENDENTCOMPLIANCE CONSULTANT UNDERTAKING.


Docket/Case Number: ADMINISTRATIVE PROCEEDING FILE NO. 3-15785

Principal Product Type: Debt - Asset Backed


THE SEC'S ADMINISTRATIVE ORDER ("ORDER") FOUND THAT JEFFERIESFAILED REASONABLY TO SUPERVISE FORMER REPRESENTATIVE JESSE C.LITVAK ("LITVAK") AND CERTAIN OTHER REPRESENTATIVES ON JEFFERIES'MORTGAGE-BACKED SECURITIES ("MBS") DESK WITH A VIEW TOPREVENTING AND DETECTING THEIR VIOLATIONS OF THE FEDERALSECURITIES LAWS DURING THE TIME PERIOD FROM 2009 TO 2011. LITVAKWAS A MANAGING DIRECTOR AND SENIOR TRADER OF RESIDENTIAL MBS("RMBS"). THE ORDER FOUND THAT, IN CONNECTION WITH INVENTORYAND INTRA-DAY PRINCIPAL TRADES IN RMBS WITH COUNTERPARTIESFROM 2009 TO 2011, LITVAK AND CERTAIN OTHER REPRESENTATIVES LIEDTO, OR OTHERWISE MISLED, CUSTOMERS ABOUT THE PRICE AT WHICHJEFFERIES HAD BOUGHT RMBS AND CONSEQUENTLY THE AMOUNT OFTHE FIRM'S PROFIT ON THE TRADES. THE ORDER FURTHER FOUND THATTHIS MISCONDUCT DECEIVED CUSTOMERS ABOUT THE PRICE AT WHICHJEFFERIES HAD RECENTLY ACQUIRED THE RMBS AND THAT JEFFERIES'IMPLEMENTATION OF ITS SUPERVISORY PROCEDURES RELATING TOREVIEW OF ITS MBS DESK REPRESENTATIVES' ELECTRONICCOMMUNICATIONS WITH CUSTOMERS WAS INADEQUATE TO PREVENTAND DETECT THESE MISREPRESENTATIONS TO CUSTOMERS INVIOLATION OF EXCHANGE ACT SECTION 15(B)(4)(E).


Resolution:

Other Sanctions Ordered: INDEPENDENT COMPLIANCE CONSULTANT UNDERTAKING

Sanction Details: THE ORDER CENSURED JEFFERIES AND REQUIRED THE PAYMENT OFDISGORGEMENT OF $4,200,402, PREJUDGMENT INTEREST THEREON OF$292,515, AND A CIVIL PENALTY OF $4,200,402, WHICH WAS PAID ONMARCH 21, 2014. JEFFERIES ALSO UNDERTOOK TO RETAIN ANINDEPENDENT COMPLIANCE CONSULTANT WITHIN 30 DAYS OF THEISSUANCE OF THE ORDER TO REVIEW SPECIFIED POLICIES ANDPROCEDURES.


Settled






THE ORDER CENSURED JEFFERIES AND REQUIRED THE PAYMENT OFDISGORGEMENT OF $4,200,402, PREJUDGMENT INTEREST THEREON OF$292,515, AND A CIVIL PENALTY OF $4,200,402, WHICH WAS PAID ONMARCH 21, 2014. JEFFERIES ALSO UNDERTOOK TO RETAIN ANINDEPENDENT COMPLIANCE CONSULTANT WITHIN 30 DAYS OF THEISSUANCE OF THE ORDER TO REVIEW SPECIFIED POLICIES ANDPROCEDURES.

Firm Statement IN SETTLEMENT OF THIS ACTION, JEFFERIES SUBMITTED AN OFFER OFSETTLEMENT ("OFFER") WHICH THE SEC DETERMINED TO ACCEPT ANDISSUED THE ORDER. IN THE OFFER, SOLELY FOR THE PURPOSE OFSETTLING THESE PROCEEDINGS, JEFFERIES AGREED TO CONSENT TOTHE ISSUANCE OF THE ORDER MAKING CERTAIN FINDINGS AND TOCONSENT TO THE JURISDICTION OF THE SEC OVER IT AND THE SUBJECTMATTER SOLELY FOR PURPOSES OF THAT ACTION. PURSUANT TO THEOFFER, JEFFERIES ADMITTED TO CERTAIN FACTS IN THE ORDER. THEALLEGATIONS, DISPOSITIONS, FINDINGS AND SANCTIONS OF THE ORDERARE DESCRIBED ABOVE IN ITEMS 7 AND 12. JEFFERIES HAS ALSOENTERED INTO A NON-PROSECUTION AGREEMENT ("NPA") WITH THE U.S.DEPARTMENT OF JUSTICE RELATING TO LITVAK AND CERTAIN JEFFERIES'EMPLOYEES PURCHASE AND SALE OF RMBS-INCLUDING TO OR FROMLEGACY SECURITIES PUBLIC-PRIVATE INVESTMENT FUNDS AS PART OFTHE PUBLIC-PRIVATE INVESTMENT PROGRAM CREATED AND PARTIALLYFUNDED BY THE UNITED STATES GOVERNMENT THROUGH THETROUBLED ASSET RELIEF PROGRAM. IN THE NPA, JEFFERIES, AMONGOTHER THINGS, STIPULATED TO CERTAIN FACTS AND AGREED TO PAY AMONETARY PENALTY IN THE AMOUNT OF $25,000,000, INCLUSIVE OF (A)ANY RESTITUTION PAID TO VICTIMS, UP TO $11 MILLION, AND (B) ANYMONETARY PENALTY IMPOSED BY THE SEC.

Disclosure 39 of 85

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Initiated By: INTERNATIONAL SECURITIES EXCHANGE




Allegations: ON OCTOBER 17, 2011, JEFFERIES RECEIVED A CUSTOMER ORDER TOPURCHASE 1500 REXX NOVEMBER 17.5 CALLS. AFTER EXECUTING 1000CONTRACTS OF THE CUSTOMER ORDER, JEFFERIES PURCHASES 5500SHARES OF REXX FOR ITS PROPRIETARY ACCOUNT TO HEDGE THEFACILITATION PORTION OF THE CUSTOMER ORDER.PRIOR TO DISCLOSING THE REMAINING 500 CONTRACTS, JEFFERIESPURCHASED 189 NOVEMBER 15 CALLS FOR ITS PROP ACCOUNT WHICHWAS PRIMARILY EXECUTED TO HEDGE ITS ANTICIPATED FACILITATION OFTHE REMAINDER OF THE CUSTOMER ORDER.THE CONDUCT DESCRIBED ABOVE CONSTITUTES 3 SEPARATE & DISTINCTVIOLATIONS OF ISE RULE 400.02













Resolution:


Sanction Details: FIRM FINED $30,000


No




Initiated By: INTERNATIONAL SECURITIES EXCHANGE








Allegations: JEFFERIES IMPROPERLY HEDGED ITS ANTICIPATED FACILITATION OF ACUSTOMER ORDER PRIOR TO DISCLOSURE OF THE CUSTOMER ORDERTO THE MARKET PLACE, A VIOLATION OF ISE RULE 400.02.











Sanction Details: FIRM WAS FINED $30,000.


Disclosure 40 of 85

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Initiated By: FINRA







Allegations: FINRA BY-LAWS ARTICLE III, SECTION 3; FINRA RULE 2010; NASD RULE2110:THE FIRM EMPLOYED A STATUTORILY DISQUALIFIED INDIVIDUAL IN A NON-REGISTERED CAPACITY AND PERMITTED THE INDIVIDUAL TO REMAINASSOCIATED WITH THE FIRM FOR EIGHT YEARS. THE INDIVIDUAL WASBARRED FROM ASSOCIATION WITH A MEMBER FIRM FOR SELLINGPROPERTY OF HIS FORMER FIRM TO INDIVIDUALS WHO IDENTIFIEDTHEMSELVES AS BEING EMPLOYEES OF ANOTHER MEMBER FIRM. THEINDIVIDUAL WAS STATUTORILY DISQUALIFIED AT THE TIME OF HIS HIREAND REMAINED SO THROUGHOUT HIS EMPLOYMENT WITH THE FIRM. THEINDIVIDUAL FAILED TO DISCLOSE HIS STATUTORY DISQUALIFICATION TOTHE FIRM. THE FIRM'S INITIAL REVIEW OF THE INDIVIDUAL'SBACKGROUND WAS INCOMPLETE AND DID NOT REVEAL THAT THEINDIVIDUAL HAD BEEN BARRED AND THEREFORE WAS STATUTORILYDISQUALIFIED FROM ASSOCIATING WITH THE FIRM IN ANY CAPACITY. THEINDIVIDUAL REMAINED ASSOCIATED WITH THE FIRM IN A NON-REGISTERED CAPACITY UNTIL THE FIRM TERMINATED HIS EMPLOYMENTAFTER BECOMING AWARE THAT HE WAS STATUTORILY DISQUALIFIED INCONNECTION WITH ITS REVIEW OF OPERATIONS PROFESSIONALS FORTHE THEN NEWLY ESTABLISHED FINRA SERIES 99.









Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE IT IS CENSURED AND FINED $50,000.


No




Initiated By: FINRA


Censure






Allegations: WITHOUT ADMITTING OR DENYING FINRA'S FINDINGS, THE FIRMCONSENTED TO A CENSURE AND FINE OF $50,000 FOR EMPLOYING ASTATUTORILY DISQUALIFIED INDIVIDUAL IN VIOLATION OF FINRA BY-LAWS,ARTICLE III, SECTION 3, NASD RULE 2110, AND FINRA RULE 2010. THESUBJECT INDIVIDUAL WAS EMPLOYED IN A NON-REGISTERED CAPACITYAND FAILED TO DISCLOSE HIS STATUS UPON HIRE AND IN SUBSEQUENTMANDATORY DISCLOSURES THROUGHOUT HIS EMPLOYMENT. UPONDISCOVERY OF HIS STATUTORY DISQUALIFICATION, THE FIRMTERMINATED HIS EMPLOYMENT.











Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE IT IS CENSURED AND FINED $50,000.


Disclosure 41 of 85

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Initiated By: FINRA



Allegations: SEC RULES 204(A), 204(A)(1), 204(A)(2), 204T, 204T(A)(1), 204(B)OFREGULATION SHO - JEFFERIES LLC HAD FAIL-TO-DELIVER POSITIONS AT AREGISTERED CLEARING AGENCY IN AN EQUITY SECURITY THATRESULTED FROM SHORT SALES, AND DID NOT CLOSE THE FAIL-TO-DELIVER POSITIONS BY PURCHASING OR BORROWING SECURITIES OFLIKE KIND AND QUANTITY WITHIN THE TIME FRAME PRESCRIBED. THEFIRM HAD FAIL-TO-DELIVER POSITIONS AT A REGISTERED CLEARINGAGENCY IN AN EQUITY SECURITY THAT RESULTED FROM LONG SALES,AND DID NOT CLOSE THE FAIL-TO-DELIVER POSITIONS BY PURCHASINGOR BORROWING SECURITIES OF LIKE KIND AND QUANTITY WITHIN THETIME FRAME PRESCRIBED. THE FIRM HAD A FAIL-TO-DELIVER POSITION ATA REGISTERED CLEARING AGENCY IN AN EQUITY SECURITY THATRESULTED FROM A SALE OF A SECURITY THAT THE SELLER WAS DEEMEDTO OWN PURSUANT TO §242.200 AND INTENDED TO DELIVER ONCE ALLRESTRICTIONS ON DELIVERY HAD BEEN REMOVED, AND DID NOT CLOSETHE FAIL-TO-DELIVER POSITION BY PURCHASING OR BORROWINGSECURITIES OF LIKE KIND AND QUANTITY WITHIN THE TIME FRAMEPRESCRIBED. IN NUMEROUS INSTANCES INVOLVING AN EQUITYSECURITY, THE FIRM ACCEPTED SHORT SALE ORDERS FROM ANOTHERPERSON, OR EFFECTED SHORT SALES FOR ITS OWN ACCOUNT, WITHOUTFIRST BORROWING THE SECURITY, OR ENTERING INTO A BONA FIDEARRANGEMENT TO BORROW THE SECURITY, AND SUBMITTED THE SHORTSALES FOR CLEARANCE AND SETTLEMENT TO A PARTICIPANT THAT HAD AFAIL-TO-DELIVER POSITION AT A REGISTERED CLEARING AGENCY IN SUCHSECURITY THAT HAD NOT BEEN CLOSED OUT IN ACCORDANCE WITH THEREQUIREMENTS OF PARAGRAPHS (A) OF SEC RULE 204.














Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $15,000.FINE PAID IN FULL ON JULY 26, 2013.


No




Allegations: IN CONNECTION WITH A FINRA REVIEW OF THE FIRM'S COMPLIANCE WITHTHE REQUIREMENTS OF REGULATION SHO AND SEC RULES 204 AND 204T,FINRA DETERMINED THAT IN MULTIPLE INSTANCES DURING THE REVIEWPERIOD OF SEPTEMBER 23, 2008 THROUGH MARCH 30, 2011, THE FIRMDID NOT CLOSE FAIL-TO-DELIVER POSITIONS IN EQUITY SECURITIES BYPURCHASING OR BORROWING SECURITIES OF LIKE KIND AND QUANTITYWITHIN THE TIME FRAME PRESCRIBED. FINRA ALSO DETERMINED THAT INNUMEROUS INSTANCES, THE FIRM ACCEPTED SHORT SALE ORDERS OREFFECTED SHORT SALES FOR ITS OWN ACCOUNT WITHOUT FIRSTBORROWING THE SECURITY OR ENTERING INTO A BONA FIDEARRANGEMENT TO BORROW THE SECURITY, AND SUBMITTED THE SHORTSALES FOR CLEARANCE AND SETTLEMENT TO A PARTICIPANT THAT HAD AFAIL-TO-DELIVER POSITION THAT HAD NOT BEEN CLOSED OUT INACCORDANCE WITH THE REQUIREMENTS OF SEC RULE 204. WITHOUTADMITTING OR DENYING THE FINRA FINDINGS, THE FIRM CONSENTED TOA CENSURE AND A FINE OF $15,000.








Initiated By: FINRA


Censure






IN CONNECTION WITH A FINRA REVIEW OF THE FIRM'S COMPLIANCE WITHTHE REQUIREMENTS OF REGULATION SHO AND SEC RULES 204 AND 204T,FINRA DETERMINED THAT IN MULTIPLE INSTANCES DURING THE REVIEWPERIOD OF SEPTEMBER 23, 2008 THROUGH MARCH 30, 2011, THE FIRMDID NOT CLOSE FAIL-TO-DELIVER POSITIONS IN EQUITY SECURITIES BYPURCHASING OR BORROWING SECURITIES OF LIKE KIND AND QUANTITYWITHIN THE TIME FRAME PRESCRIBED. FINRA ALSO DETERMINED THAT INNUMEROUS INSTANCES, THE FIRM ACCEPTED SHORT SALE ORDERS OREFFECTED SHORT SALES FOR ITS OWN ACCOUNT WITHOUT FIRSTBORROWING THE SECURITY OR ENTERING INTO A BONA FIDEARRANGEMENT TO BORROW THE SECURITY, AND SUBMITTED THE SHORTSALES FOR CLEARANCE AND SETTLEMENT TO A PARTICIPANT THAT HAD AFAIL-TO-DELIVER POSITION THAT HAD NOT BEEN CLOSED OUT INACCORDANCE WITH THE REQUIREMENTS OF SEC RULE 204. WITHOUTADMITTING OR DENYING THE FINRA FINDINGS, THE FIRM CONSENTED TOA CENSURE AND A FINE OF $15,000.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $15,000.



Disclosure 42 of 85

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Initiated By: FINRA




Allegations: FINRA RULE 7450(A), NASD RULE 6955(A) - JEFFERIES & COMPANY, INC.WAS IDENTIFIED AS THE "SENT TO FIRM" ON ROUTE OR COMBINEDORDER/ROUTE REPORTS SUBMITTED TO THE ORDER AUDIT TRAILSYSTEM (OATS) THAT OATS WAS UNABLE TO LINK TO A CORRESPONDINGNEW ORDER REPORT TRANSMITTED BY THE FIRM DUE TO INACCURATE,INCOMPLETE OR IMPROPERLY FORMATTED DATA.














Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $23,500. FINE PAID INFULL ON 12/28/12.


No




Initiated By: FINRA


Censure


Docket/Case Number: 2008014868501/20110285863



Allegations: FINRA RULE 7450(A), NASD RULE 6955(A) - JEFFERIES & COMPANY, INC.WAS IDENTIFIED AS THE "SENT TO FIRM" ON ROUTE OR COMBINEDORDER/ROUTE REPORTS SUBMITTED TO THE ORDER AUDIT TRAILSYSTEM (OATS) THAT OATS WAS UNABLE TO LINK TO A CORRESPONDINGNEW ORDER REPORT TRANSMITTED BY THE FIRM DUE TO INACCURATE,INCOMPLETE OR IMPROPERLY FORMATTED DATA.








Censure


CENSURE AND FINE


Resolution:

Other Sanctions Ordered: A CENSURE AND A $23,500 FINE (CONSISTING OF $8,500 FINE IN20080148685 AND A $15,000 FINE IN 20110285863).

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $23,500



Disclosure 43 of 85

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Allegations: FINRA RULES 2010, 6730, 6730(A), 6730(B), 6730(C)(6), 6730(C)(8), 6730(E),7450, NASD RULES 3360, 6230 - JEFFERIES & COMPANY, INC. FAILED TOREPORT ITS SHORT INTEREST POSITIONS TO NASD OR FINRA. THE FIRMSUBMITTED TO FINRA ITS SHORT INTEREST POSITION REPORT WITHINCORRECT SHORT INTEREST POSITIONS OF SHARES. THE FIRMREPORTED TO THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE) TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES IT WAS NOTREQUIRED TO REPORT. THE FIRM TRANSMITTED REPORTABLE ORDEREVENTS (ROES) TO THE ORDER AUDIT TRAIL SYSTEM (OATS) THAT WEREREJECTED BY OATS FOR CONTEXT OR SYNTAX ERRORS AND WEREREPAIRABLE BUT THE FIRM FAILED TO REPAIR SOME OF THE REJECTEDROES SO THAT IT FAILED TO TRANSMIT THEM TO OATS DURING THATREVIEW PERIOD. THE FIRM FAILED TO REPORT TO TRACE TRANSACTIONSIN TRACE-ELIGIBLE SECURITIES IT WAS REQUIRED TO REPORT. THE FIRMFAILED TO REPORT TO TRACE THE CORRECT CONTRA-PARTY'SIDENTIFIER FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES. THEFIRM FAILED TO REPORT TO TRACE S1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OF THE EXECUTION TIME. THISCONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF FINRARULE 6730(A) AND A PATTERN OR PRACTICE OF LATE REPORTINGWITHOUT EXCEPTIONAL CIRCUMSTANCES IN VIOLATION OF FINRA RULE2010. THE FIRM FAILED TO REPORT TO TRACE THE CORRECT TRADEEXECUTION TIME FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES.THE FIRM REPORTED TO TRACE TRACE-ELIGIBLE SECURITIESTRANSACTIONS AND P1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIESIT WAS NOT REQUIRED TO REPORT. THE FIRM FAILED TO REPORT TOTRACE THE CORRECT MARKET IDENTIFIER FOR S1 TRANSACTIONS INTRACE-ELIGIBLE SECURITIES. THE FIRM INCORRECTLY REPORTED THETRANSACTIONS WITH THE P1 MARKET IDENTIFIER.







Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE SECURITIES

FINRA RULES 2010, 6730, 6730(A), 6730(B), 6730(C)(6), 6730(C)(8), 6730(E),7450, NASD RULES 3360, 6230 - JEFFERIES & COMPANY, INC. FAILED TOREPORT ITS SHORT INTEREST POSITIONS TO NASD OR FINRA. THE FIRMSUBMITTED TO FINRA ITS SHORT INTEREST POSITION REPORT WITHINCORRECT SHORT INTEREST POSITIONS OF SHARES. THE FIRMREPORTED TO THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE) TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES IT WAS NOTREQUIRED TO REPORT. THE FIRM TRANSMITTED REPORTABLE ORDEREVENTS (ROES) TO THE ORDER AUDIT TRAIL SYSTEM (OATS) THAT WEREREJECTED BY OATS FOR CONTEXT OR SYNTAX ERRORS AND WEREREPAIRABLE BUT THE FIRM FAILED TO REPAIR SOME OF THE REJECTEDROES SO THAT IT FAILED TO TRANSMIT THEM TO OATS DURING THATREVIEW PERIOD. THE FIRM FAILED TO REPORT TO TRACE TRANSACTIONSIN TRACE-ELIGIBLE SECURITIES IT WAS REQUIRED TO REPORT. THE FIRMFAILED TO REPORT TO TRACE THE CORRECT CONTRA-PARTY'SIDENTIFIER FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES. THEFIRM FAILED TO REPORT TO TRACE S1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OF THE EXECUTION TIME. THISCONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF FINRARULE 6730(A) AND A PATTERN OR PRACTICE OF LATE REPORTINGWITHOUT EXCEPTIONAL CIRCUMSTANCES IN VIOLATION OF FINRA RULE2010. THE FIRM FAILED TO REPORT TO TRACE THE CORRECT TRADEEXECUTION TIME FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES.THE FIRM REPORTED TO TRACE TRACE-ELIGIBLE SECURITIESTRANSACTIONS AND P1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIESIT WAS NOT REQUIRED TO REPORT. THE FIRM FAILED TO REPORT TOTRACE THE CORRECT MARKET IDENTIFIER FOR S1 TRANSACTIONS INTRACE-ELIGIBLE SECURITIES. THE FIRM INCORRECTLY REPORTED THETRANSACTIONS WITH THE P1 MARKET IDENTIFIER.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $62,500. FINE PAID INFULL ON 12/10/12.


No




Allegations: FINRA ALLEGED THAT, BETWEEN MARCH 2007 AND MARCH 2011, THE FIRMINCURRED VARIOUS TRACE REPORTING VIOLATIONS IN VIOLATION OFFINRA RULES 6730 AND 2010; SHORT INTEREST REPORTING VIOLATIONSIN VIOLATION OF FINRA RULE 3360; AND OATS REPORTING VIOLATIONS INVIOLATION OF FINRA RULE 7450. WITHOUT ADMITTING OR DENYINGTHESE VIOLATIONS, THE FIRM ACCEPTED A CENSURE AND FINE IN THEAMOUNT OF $62,500.








Initiated By: FINRA


Censure


CENSURE AND FINE




Other Product Type(s): TRACE ELIGIBLE SECURITIES

FINRA ALLEGED THAT, BETWEEN MARCH 2007 AND MARCH 2011, THE FIRMINCURRED VARIOUS TRACE REPORTING VIOLATIONS IN VIOLATION OFFINRA RULES 6730 AND 2010; SHORT INTEREST REPORTING VIOLATIONSIN VIOLATION OF FINRA RULE 3360; AND OATS REPORTING VIOLATIONS INVIOLATION OF FINRA RULE 7450. WITHOUT ADMITTING OR DENYINGTHESE VIOLATIONS, THE FIRM ACCEPTED A CENSURE AND FINE IN THEAMOUNT OF $62,500.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $62,500 (COMPRISED OF$15,000 FOR THE SHORT INTEREST REPORTING VIOLATIONS, $40,000 FORTHE TRACE REPORTING VIOLATIONS, AND $7,500 FOR THE OATSVIOLATIONS).



Disclosure 44 of 85

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Initiated By: FINRA

Allegations: NASD RULES 2110, 2440, INTERPRETATIVE MATERIAL 2440-1, 2440-2 -JEFFERIES & COMPANY, INC., BOUGHT OR SOLD CORPORATE BONDSFROM OR TO CUSTOMERS AND FAILED TO BUY OR SELL BONDS AT APRICE THAT WAS FAIR, TAKING INTO CONSIDERATION ALL RELEVANTCIRCUMSTANCES, INCLUDING MARKET CONDITIONS WITH RESPECT TOEACH BOND AT THE TIME OF THE TRANSACTION, THE EXPENSE INVOLVEDAND THAT THE FIRM WAS ENTITLED TO A PROFIT.








Initiated By: FINRA








Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $30,000 AND REQUIRED TOPAY $19,848.15,PLUS INTEREST, IN RESTITUTION TO CUSTOMERS. AREGISTERED FIRM PRINCIPAL SHALL SUBMIT SATISFACTORY PROOF OFPAYMENT OF RESTITUTION, OR OF REASONABLE AND DOCUMENTEDEFFORTS UNDERTAKEN TO EFFECT RESTITUTION TO FINRA NO LATERTHAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC BY THE NAC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. FINE PAID IN FULL ON JUNE 26, 2012.


No




Allegations: FINRA ALLEGED THAT, IN FIVE TRANSACTIONS FROM JANUARY 2008THROUGH MARCH 2008, THE FIRM FAILED TO BUY OR SELL CORPORATEBONDS AT A PRICE THAT WAS FAIR IN VIOLATION OF NASD RULES 2110,2440 AND INTERPRETATIVE MATERIAL 2440-1, 2440-2.








Initiated By: FINRA


Censure






Allegations: FINRA ALLEGED THAT, IN FIVE TRANSACTIONS FROM JANUARY 2008THROUGH MARCH 2008, THE FIRM FAILED TO BUY OR SELL CORPORATEBONDS AT A PRICE THAT WAS FAIR IN VIOLATION OF NASD RULES 2110,2440 AND INTERPRETATIVE MATERIAL 2440-1, 2440-2.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $30,000 AND REQUIRED TOPAY $19,848.15,PLUS INTEREST, IN RESTITUTION TO CUSTOMERS. AREGISTERED FIRM PRINCIPAL SHALL SUBMIT SATISFACTORY PROOF OFPAYMENT OF RESTITUTION, OR OF REASONABLE AND DOCUMENTEDEFFORTS UNDERTAKEN TO EFFECT RESTITUTION TO FINRA NO LATERTHAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC BY THE NAC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED.



Disclosure 45 of 85

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Allegations: NASD RULES 2110, 2210, 3010, 3310, INTERPRETATIVE MATERIAL 3310 -JEFFERIES & COMPANY, INC. WAS SUBJECT TO A FINRA DISCIPLINARYACTION FOR OVERSTATING ITS ADVERTISED TRADE VOLUME IN AUTEX,BLOOMBERG AND REUTERS, AND FOR RELATED SUPERVISORYDEFICIENCIES. FOR APPROXIMATELY EIGHT MONTHS THEREAFTER THEFIRM'S AGGREGATE TRADE VOLUME ADVERTISED IN AUTEX, BLOOMBERGAND REUTERS SUBSTANTIALLY EXCEEDED THE FIRM'S EXECUTED TRADEVOLUME. ON ONE TRADE DATE WHEN THE FIRM DID NOT EXECUTE ANYTRADES FOR A PARTICULAR SECURITY, THE FIRM PUBLISHED A TRADEVOLUME OF MORE THAN 270,000 IN THAT SECURITY. THE FIRM'SADVERTISED TRADE VOLUME WAS PUBLISHED TO THE SUBSCRIBERS OFAUTEX, BLOOMBERG AND REUTERS. ALTHOUGH THE FIRM ESTABLISHED ASUPERVISORY SYSTEM TO REVIEW ADVERTISED TRADE VOLUME, PRIORTO FINRA'S DISCIPLINARY ACTION, IT FAILED TO IMPLEMENT THESUPERVISORY SYSTEM TO ENSURE COMPLIANCE WITH REGULATORYREQUIREMENTS FOR ACCURACY IN THE FIRM'S ADVERTISEMENT OFEXECUTED TRADE VOLUME. THE FIRM FAILED TO PURSUE OR REDRESS ANUMBER OF RED FLAGS AS TO POTENTIAL OVERSTATEMENTS OFADVERTISED TRADE VOLUME BY ITS TRADERS INCLUDING: FAILING TOTAKE REASONABLE STEPS IN RESPONSE TO ITS DISCIPLINARY ACTION,INCLUDING FAILING TO GIVE APPROPRIATE TRAINING TO TRADERS ANDTHEIR SUPERVISORS REGARDING ACCURATE ADVERTISED TRADEVOLUME; AND FAILING TO PROPERLY FOLLOW UP ON, AND TAKEAPPROPRIATE REMEDIAL ACTION WITH RESPECT TO INSTANCES OFPOTENTIAL OVER-ADVERTISING DETECTED DURING THE REVIEW PERIODBY A TRADING SUPERVISOR. IMMEDIATELY UPON RECEIVING THE STAFF'SINITIAL INQUIRY LETTER FOR THIS MATTER, THE FIRM, ON ITS OWNACCORD, CONDUCTED AN INTERNAL INVESTIGATION; PROVIDED AWRITTEN SUMMATION OF THE RESULTS OF THAT INVESTIGATION;ALLOWED THE STAFF ACCESS TO RELATED DOCUMENTATION; ANDIMPOSED SIGNIFICANT DISCIPLINARY ACTIONS AGAINST TRADERSRESPONSIBLE FOR THE INFLATED ADVERTISEMENTS AND THEIRDESIGNATED SUPERVISOR. THE MITIGATED MONETARY SANCTION IN THISMATTER REFLECTS THE EXTRAORDINARILY COOPERATIVE ACTIONSUNDERTAKEN BY THE FIRM.








Initiated By: FINRA
















Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $550,000. FINE PAID INFULL FEBRUARY 24, 2012.


No











Initiated By: FINRA


Censure


CENSURED AND FINED.





NASD RULES 2110, 2210, 3010, 3310, INTERPRETATIVE MATERIAL 3310 -JEFFERIES & COMPANY, INC. WAS SUBJECT TO A FINRA DISCIPLINARYACTION FOR OVERSTATING ITS ADVERTISED TRADE VOLUME IN AUTEX,BLOOMBERG AND REUTERS, AND FOR RELATED SUPERVISORYDEFICIENCIES. FOR APPROXIMATELY EIGHT MONTHS THEREAFTER THEFIRM'S AGGREGATE TRADE VOLUME ADVERTISED IN AUTEX, BLOOMBERGAND REUTERS SUBSTANTIALLY EXCEEDED THE FIRM'S EXECUTED TRADEVOLUME. ON ONE TRADE DATE WHEN THE FIRM DID NOT EXECUTE ANYTRADES FOR A PARTICULAR SECURITY, THE FIRM PUBLISHED A TRADEVOLUME OF MORE THAN 270,000 IN THAT SECURITY. THE FIRM'SADVERTISED TRADE VOLUME WAS PUBLISHED TO THE SUBSCRIBERS OFAUTEX, BLOOMBERG AND REUTERS. ALTHOUGH THE FIRM ESTABLISHED ASUPERVISORY SYSTEM TO REVIEW ADVERTISED TRADE VOLUME, PRIORTO FINRA'S DISCIPLINARY ACTION, IT FAILED TO IMPLEMENT THESUPERVISORY SYSTEM TO ENSURE COMPLIANCE WITH REGULATORYREQUIREMENTS FOR ACCURACY IN THE FIRM'S ADVERTISEMENT OFEXECUTED TRADE VOLUME. THE FIRM FAILED TO PURSUE OR REDRESS ANUMBER OF RED FLAGS AS TO POTENTIAL OVERSTATEMENTS OFADVERTISED TRADE VOLUME BY ITS TRADERS INCLUDING: FAILING TOTAKE REASONABLE STEPS IN RESPONSE TO ITS DISCIPLINARY ACTION,INCLUDING FAILING TO GIVE APPROPRIATE TRAINING TO TRADERS ANDTHEIR SUPERVISORS REGARDING ACCURATE ADVERTISED TRADEVOLUME; AND FAILING TO PROPERLY FOLLOW UP ON, AND TAKEAPPROPRIATE REMEDIAL ACTION WITH RESPECT TO INSTANCES OFPOTENTIAL OVER-ADVERTISING DETECTED DURING THE REVIEW PERIODBY A TRADING SUPERVISOR. IMMEDIATELY UPON RECEIVING THE STAFF'SINITIAL INQUIRY LETTER FOR THIS MATTER, THE FIRM, ON ITS OWNACCORD, CONDUCTED AN INTERNAL INVESTIGATION; PROVIDED AWRITTEN SUMMATION OF THE RESULTS OF THAT INVESTIGATION;ALLOWED THE STAFF ACCESS TO RELATED DOCUMENTATION; ANDIMPOSED SIGNIFICANT DISCIPLINARY ACTIONS AGAINST TRADERSRESPONSIBLE FOR THE INFLATED ADVERTISEMENTS AND THEIRDESIGNATED SUPERVISOR. THE MITIGATED MONETARY SANCTION IN THISMATTER REFLECTS THE EXTRAORDINARILY COOPERATIVE ACTIONSUNDERTAKEN BY THE FIRM.


Resolution:





Disclosure 46 of 85

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Allegations: SEC RULE 15C3-5(C)(1)(II), NASDAQ RULES 2110, 3010 - JEFFERIES &COMPANY, INC. FAILED TO HAVE RISK MANAGEMENT CONTROLS ANDSUPERVISORY PROCEDURES REASONABLY DESIGNED TO PREVENT THEENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEEDAPPROPRIATE PRICE AND/OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THAT INDICATEDUPLICATIVE ORDERS. THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH SEC RULE 15C3-5(C)(1)(II) WHICH REQUIRES THE FIRMTO HAVE SUPERVISORY PROCEDURES THAT ARE REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTINGORDERS THAT EXCEED APPROPRIATE PRICE AND/OR SIZE PARAMETERS,ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, ORTHAT INDICATE DUPLICATIVE ORDERS.














Other Product Type(s): NASDAQ SECURITIES

Allegations: SEC RULE 15C3-5(C)(1)(II), NASDAQ RULES 2110, 3010 - JEFFERIES &COMPANY, INC. FAILED TO HAVE RISK MANAGEMENT CONTROLS ANDSUPERVISORY PROCEDURES REASONABLY DESIGNED TO PREVENT THEENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEEDAPPROPRIATE PRICE AND/OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THAT INDICATEDUPLICATIVE ORDERS. THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH SEC RULE 15C3-5(C)(1)(II) WHICH REQUIRES THE FIRMTO HAVE SUPERVISORY PROCEDURES THAT ARE REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTINGORDERS THAT EXCEED APPROPRIATE PRICE AND/OR SIZE PARAMETERS,ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, ORTHAT INDICATE DUPLICATIVE ORDERS.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $20,000 AND REQUIRED TOREVISE ITS CONTROLS AND WRITTEN SUPERVISORY PROCEDURES TOPREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERSTHAT EXCEED APPROPRIATE PRICE AND/OR SIZE PARAMETERS, ON ANORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THATINDICATE DUPLICATIVE ORDERS WITHIN 30 BUSINESS DAYS OFACCEPTANCE OF THIS AWC BY THE NASDAQ REVIEW COUNCIL.


No







www.finra.org/brokercheck User GuidanceWITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $20,000 AND REQUIRED TOREVISE ITS CONTROLS AND WRITTEN SUPERVISORY PROCEDURES TOPREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERSTHAT EXCEED APPROPRIATE PRICE AND/OR SIZE PARAMETERS, ON ANORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THATINDICATE DUPLICATIVE ORDERS WITHIN 30 BUSINESS DAYS OFACCEPTANCE OF THIS AWC BY THE NASDAQ REVIEW COUNCIL.




Censure





Other Product Type(s): NASDAQ SECURITIES

Allegations: SEC RULE 15C3-5(C)(1)(II), NASDAQ RULES 2110, 3010 - JEFFERIES &COMPANY, INC. FAILED TO HAVE RISK MANAGEMENT CONTROLS ANDSUPERVISORY PROCEDURES REASONABLY DESIGNED TO PREVENT THEENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEEDAPPROPRIATE PRICE AND/OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THAT INDICATEDUPLICATIVE ORDERS. THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH SEC RULE 15C3-5(C)(1)(II) WHICH REQUIRES THE FIRMTO HAVE SUPERVISORY PROCEDURES THAT ARE REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ERRONEOUS ORDERS.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $20,000 AND REQUIRED TOREVISE ITS CONTROLS AND WRITTEN SUPERVISORY PROCEDURES TOPREVENT THE ENTRY OF ERRONEOUS ORDERS WITHIN 30 BUSINESSDAYS OF ACCEPTANCE OF THIS AWC BY THE NASDAQ REVIEW COUNCIL.








WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $20,000 AND REQUIRED TOREVISE ITS CONTROLS AND WRITTEN SUPERVISORY PROCEDURES TOPREVENT THE ENTRY OF ERRONEOUS ORDERS WITHIN 30 BUSINESSDAYS OF ACCEPTANCE OF THIS AWC BY THE NASDAQ REVIEW COUNCIL.

Disclosure 47 of 85

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Docket/Case Number: 12-ARCA-2



Allegations: **12/21/2011** STIPULATION OF FACTS AND CONSENT TO PENALTY FILEDBY THE LEGAL SECTION OF THE MARKET REGULATION DEPARTMENT ATFINRA AND PENDING.CONSENTED TO FINDINGS: FOR THE SOLE PURPOSE OF SETTLING THISDISCIPLINARY PROCEEDING, WITHOUT ADJUDICATION OF ANY ISSUES OFLAW OR FACT, AND WITHOUT ADMITTING OR DENYING ANY ALLEGATIONSOR FINDINGS, JEFFERIES & COMPANY, INC. STIPULATED THAT, ONJANUARY 21, 2011, IT:1.VIOLATED NYSE ARCA OPTIONS RULE 6.24 BY SUBMITTING A CONTRARYEXERCISE ADVICE AFTER THE 5:30 P.M. ET EXERCISE CUT-OFF TIME ANDNYSE ARCA OPTIONS RULE 6.24 COMMENTARY .09 THERETO BYENGAGING IN CONDUCT INCONSISTENT WITH JUST AND EQUITABLEPRINCIPLES OF TRADE IN THAT, IN ORDER TO TAKE ADVANTAGE OF AMATERIAL NEWS ANNOUNCEMENT AFTER THE 5:30 P.M. ET EXERCISE CUT-OFF TIME, THE FIRM, THROUGH ITS TRADER, IMPROPERLY SUBMITTEDNOTICE OF A CONTRARY EXERCISE ADVICE.2.VIOLATED NYSE ARCA OPTIONS RULE 11.18, IN THAT THE FIRM FAILEDTO ESTABLISH APPROPRIATE POLICIES AND PROCEDURES FORSUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, TO ENSURE THAT EMPLOYEES SUBMITTEDCONTRARY EXERCISE ADVICES IN ACCORDANCE WITH NYSE ARCAOPTIONS RULES.STIPULATED SANCTION:CENSURE, A FINE IN THE AMOUNT OF $90,000,DISGORGEMENT OF $90,750 IN PROFITS REALIZED IN CONNECTION WITHTHE VIOLATION, AND AN UNDERTAKING TO ENHANCE THE FIRM'SPROCEDURES AND CONTROLS GOVERNING THE SUBMISSIONS OFCONTRARY EXERCISE ADVICE AFTER 5:30 P.M.










Resolution:

Other Sanctions Ordered: $90,000 FOR THE FINE, $90,750 IN RESTITUTION AND AN UNDERTAKING TOIMPLEMENT SPECIFIC PROCEDURES.

Sanction Details: **1/13/12** RESPONDENT VIOLATED NYSE ARCA OPTIONS RULE 6.24 ANDNYSE ARCA OPTIONS RULE 6.24 COMMENTARY .09 BY SUBMITTING ACONTRARY EXERCISE ADVICE ("CEA") AFTER THE 5:30 P.M. EXERCISECUT-OFF TIME IN ORDER TO TAKE ADVANTAGE OF A MATERIAL NEWSANNOUNCEMENT MADE AFTER THAT CUT-OFF TIME. BY SO-DOING,RESPONDENT PREVENTED THE AUTOMATIC EXERCISE OF THEUNDERLYING SECURITIES AS A RESULT OF THE LATE-BREAKING POSITIVENEWS. RESPONDENT ALSO VIOLATED NYSE ARCA OPTIONS RULE 11.18BY FAILING TO ESTABLISH APPROPRIATE POLICIES AND PROCEDURESFOR SUPERVISION AND CONTROL AND FAILING TO TAKE REASONABLESTEPS TO ENSURE THAT EMPLOYEES COMPLIED WITH THE NYSE ARCAOPTIONS RULES RELATING TO CEA'S. RESPONDENT CONSENTED TO ACENSURE, AND A FINE OF $90,000, RESTITUTION OF $90,750 IN PROFITSREALIZED IN CONNECTION WITH THE VIOLATION, AND AN UNDERTAKINGTO IMPLEMENT SPECIFIC PROCEDURES FOR EENHANCING THE FIRM'SPROCEDURES ABD CONTROLS GOVENING THE SUBMISSIONS OF CEA'SAFTER 5:30 P.M.

Regulator Statement **4/24/12**THE DECISION IS NOW FINAL.


Decision


Allegations: FOR THE SOLE PURPOSE OF SETTLING THIS DISCIPLINARY PROCEEDING,WITHOUT ADJUDICATION OF ANY ISSUES OF LAW OR FACT, AND WITHOUTADMITTING OR DENYING ANY ALLEGATIONS OR FINDINGS, JEFFERIES &COMPANY, INC. STIPULATED THAT, ON JANUARY 21, 2011, IT: 1. VIOLATEDNYSE ARCA OPTIONS RULE 6.24 BY SUBMITTING A CONTRARY EXERCISEADVICE AFTER THE 5:30 P.M. ET EXERCISE CUT-OFF TIME AND IN ADDITIONTHE FIRM VIOLATED NYSE ARCA OPTIONS RULE 6.24 COMMENTARY .09THERETO BY ENGAGING IN CONDUCT INCONSISTENT WITH JUST ANDEQUITABLE PRINCIPLES OF TRADE IN THAT, IN ORDER TO TAKEADVANTAGE OF A MATERIAL NEWS ANNOUNCEMENT AFTER THE 5:30 P.M.ET EXERCISE CUT-OFF TIME, IMPROPERLY SUBMITTED NOTICE OF ACONTRARY EXERCISE ADVICE. 2. VIOLATED NYSE ARCA OPTIONS RULE11.18, IN THAT THE FIRM FAILED TO ESTABLISH APPROPRIATE POLICIESAND PROCEDURES FOR SUPERVISION AND CONTROL, INCLUDING ASEPARATE SYSTEM OF FOLLOW-UP AND REVIEW, TO ENSURE THATEMPLOYEES SUBMITTED CONTRARY EXERCISE ADVICES IN ACCORDANCEWITH NYSE ARCA OPTIONS RULES. STIPULATED SANCTION: CENSURE, AFINE IN THE AMOUNT OF $90,000, DISGORGEMENT OF $90,750 IN PROFITSREALIZED IN CONNECTION WITH THE VIOLATION, AND AN UNDERTAKINGTO ENHANCE THE FIRM'S PROCEDURES AND CONTROLS GOVERNING THESUBMISSIONS OF CONTRARY EXERCISE ADVICE AFTER 5:30 P.M.









Censure


$90,000 FOR THE FINE, $90,750 IN DISGORGEMENT AND AN UNDERTAKINGTO IMPLEMENT SPECIFIC PROCEDURES.


Docket/Case Number: 12-ARCA-2



FOR THE SOLE PURPOSE OF SETTLING THIS DISCIPLINARY PROCEEDING,WITHOUT ADJUDICATION OF ANY ISSUES OF LAW OR FACT, AND WITHOUTADMITTING OR DENYING ANY ALLEGATIONS OR FINDINGS, JEFFERIES &COMPANY, INC. STIPULATED THAT, ON JANUARY 21, 2011, IT: 1. VIOLATEDNYSE ARCA OPTIONS RULE 6.24 BY SUBMITTING A CONTRARY EXERCISEADVICE AFTER THE 5:30 P.M. ET EXERCISE CUT-OFF TIME AND IN ADDITIONTHE FIRM VIOLATED NYSE ARCA OPTIONS RULE 6.24 COMMENTARY .09THERETO BY ENGAGING IN CONDUCT INCONSISTENT WITH JUST ANDEQUITABLE PRINCIPLES OF TRADE IN THAT, IN ORDER TO TAKEADVANTAGE OF A MATERIAL NEWS ANNOUNCEMENT AFTER THE 5:30 P.M.ET EXERCISE CUT-OFF TIME, IMPROPERLY SUBMITTED NOTICE OF ACONTRARY EXERCISE ADVICE. 2. VIOLATED NYSE ARCA OPTIONS RULE11.18, IN THAT THE FIRM FAILED TO ESTABLISH APPROPRIATE POLICIESAND PROCEDURES FOR SUPERVISION AND CONTROL, INCLUDING ASEPARATE SYSTEM OF FOLLOW-UP AND REVIEW, TO ENSURE THATEMPLOYEES SUBMITTED CONTRARY EXERCISE ADVICES IN ACCORDANCEWITH NYSE ARCA OPTIONS RULES. STIPULATED SANCTION: CENSURE, AFINE IN THE AMOUNT OF $90,000, DISGORGEMENT OF $90,750 IN PROFITSREALIZED IN CONNECTION WITH THE VIOLATION, AND AN UNDERTAKINGTO ENHANCE THE FIRM'S PROCEDURES AND CONTROLS GOVERNING THESUBMISSIONS OF CONTRARY EXERCISE ADVICE AFTER 5:30 P.M.


Resolution:

Other Sanctions Ordered: $90,000 FOR THE FINE, $90,750 IN DISGORGEMENT AND AN UNDERTAKINGTO IMPLEMENT SPECIFIC PROCEDURES.

Sanction Details: THE FIRM CONSENTED TO A CENSURE, AND A FINE OF $90,000,DISGORGEMENT OF $90,750 IN PROFITS REALIZED IN CONNECTION WITHVIOLATION, AND AN UNDERTAKING TO IMPLEMENT SPECIFICPROCEDURES FOR ENHANCING THE FIRM'S PROCEDURES ANDCONTROLS GOVERNING THE SUBMISSIONS OF CEA'S AFTER 5:30 P.M.


Decision & Order of Offer of Settlement

Disclosure 48 of 85

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Initiated By: FINRA






Other Product Type(s): THRESHOLD SECURITIES

Allegations: SEC RULE 203(B)(3) OF REGULATION SHO, NASD RULES 2110, 3010 -JEFFERIES & COMPANY, INC. HAD FAIL-TO-DELIVER POSITIONS AT AREGISTERED CLEARING AGENCY IN THRESHOLD SECURITIES FOR 13CONSECUTIVE SETTLEMENT DAYS AND FAILED TO IMMEDIATELYTHEREAFTER CLOSE OUT THE FAIL-TO DELIVER POSITIONS BYPURCHASING SECURITIES OF LIKE KIND AND QUANTITY. THE FIRM HADFAIL-TO-DELIVER POSITIONS AT A REGISTERED CLEARING AGENCY INTHRESHOLD SECURITIES FOR 13 CONSECUTIVE SETTLEMENT DAYS ANDWITHOUT CLOSING OUT THE FAIL-TO-DELIVER POSITIONS BYPURCHASING SECURITIES OF LIKE KIND AND QUANTITY, IT FAILED TOBORROW THE SECURITY OR ENTER INTO A BONA FIDE ARRANGEMENT TOBORROW THE SECURITY BEFORE EXECUTING PROPRIETARY SHORTSALES. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO RULE 203(A) OF REGULATION SHO. THE FIRM FAILED TOPROVIDE DOCUMENTARY EVIDENCE THAT IT PERFORMED THESUPERVISORY REVIEWS RELATED TO RULE 203(B)(3) OF REGULATIONSHO SET FORTH IN ITS WRITTEN SUPERVISORY PROCEDURES.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $17,500. FINE PAID INFULL DECEMBER 30, 2011.


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $17,500. FINE PAID INFULL DECEMBER 30, 2011.


Initiated By: FINRA


Censure





Other Product Type(s): THRESHOLD SECURITIES

Allegations: SEC RULE 203(B)(3) OF REGULATION SHO, NASD RULES 2110, 3010 -JEFFERIES & COMPANY, INC. HAD FAIL-TO-DELIVER POSITIONS AT AREGISTERED CLEARING AGENCY IN THRESHOLD SECURITIES FOR 13CONSECUTIVE SETTLEMENT DAYS AND FAILED TO IMMEDIATELYTHEREAFTER CLOSE OUT THE FAIL-TO DELIVER POSITIONS BYPURCHASING SECURITIES OF LIKE KIND AND QUANTITY. THE FIRM HADFAIL-TO-DELIVER POSITIONS AT A REGISTERED CLEARING AGENCY INTHRESHOLD SECURITIES FOR 13 CONSECUTIVE SETTLEMENT DAYS ANDWITHOUT CLOSING OUT THE FAIL-TO-DELIVER POSITIONS BYPURCHASING SECURITIES OF LIKE KIND AND QUANTITY, IT FAILED TOBORROW THE SECURITY OR ENTER INTO A BONA FIDE ARRANGEMENT TOBORROW THE SECURITY BEFORE EXECUTING PROPRIETARY SHORTSALES. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO RULE 203(A) OF REGULATION SHO. THE FIRM FAILED TOPROVIDE DOCUMENTARY EVIDENCE THAT IT PERFORMED THESUPERVISORY REVIEWS RELATED TO RULE 203(B)(3) OF REGULATIONSHO SET FORTH IN ITS WRITTEN SUPERVISORY PROCEDURES.



Resolution:












Disclosure 49 of 85

i


Allegations: SECTION 17(A)(2) OF THE SECURITIES ACT OF 1933, SEC RULE 17A-3,NASD RULES 2110, 2210, 2211, 2510, 3010, 3110 AND MSRB RULES G-8, G-17,G-21, G-27, G-32: THE FIRM ACTED AS A "DOWNSTREAM" BROKER OFAUCTION RATE SECURITIES (ARS) AND SOLD IN EXCESS OF ONE BILLIONDOLLARS OF STUDENT LOAN, MUNICIPAL, AND PREFERRED ARS TOCUSTOMERS. SHORTLY AFTER MOST OF THE ARS MARKETS HAD BECOMEILLIQUID, APPROXIMATELY $845 MILLION OF ARS WAS HELD IN ACCOUNTSAT THE FIRM, APPROXIMATELY $659 MILLION OF WHICH WAS HELD BY ITSCORPORATE CASH MANAGEMENT (CCM) GROUP CUSTOMERS. THEGROUP PROVIDED INVESTMENT ADVICE, RECOMMENDATIONS ANDBROKERAGE SERVICES FOR CORPORATE CLIENTS WITH SHORT-TERMINVESTMENT PORTFOLIOS. BECAUSE TWO OF THE FIRM'S REGISTEREDREPRESENTATIVES EXERCISED DISCRETION IN SELECTING WHICHPARTICULAR ARS TO BUY AND SELL FOR THE DISCRETIONARY CLIENTS,THE FIRM AND THESE REGISTERED REPRESENTATIVES BECAMEOBLIGATED BUT FAILED TO DISCLOSE TO THE DISCRETIONARY CLIENTSMATERIAL FACTS RELATING TO EACH COMPLETED TRANSACTION,SPECIFICALLY THE ADDITIONAL COMPENSATION THEY EARNED ONPURCHASES OF NEW ISSUE ARS, THE DUAL ROLE THEY PLAYED INEFFECTING TRANSACTIONS BETWEEN THE DISCRETIONARY CLIENTS'ACCOUNTS AND OTHER CORPORATE CASH MANAGEMENT CLIENTS, ANDTHE EXISTENCE OF ARS THAT PROVIDED HIGHER YIELDS AT THE TIMETHEY COMPLETED THE NEW ISSUE AND INTER-CLIENT TRANSACTIONS.THE FIRM VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT OF 1933WHEN IT FAILED TO DISCLOSE MATERIAL FACTS TO CUSTOMERS OROMITTED MATERIAL FACTS IN CONNECTION WITH RELEVANT BUSINESSAND MANAGEMENT INFORMATION CONCERNING ARS AND THIS RULEMAKES IT UNLAWFUL FOR ANY PERSON IN THE OFFER OR SALE OF ANYSECURITIES BY THE USE OF ANY MEANS OR INSTRUMENTS OFTRANSACTION OR COMMUNICATION IN INTERSTATE COMMERCE OR BYUSE OF THE MAILS, DIRECTLY OR INDIRECTLY TO OBTAIN MONEY ORPROPERTY BY MEANS OF ANY UNTRUE STATEMENT OF A MATERIAL FACTOR ANY OMISSION TO STATE A MATERIAL FACT NECESSARY IN ORDER TOMAKE THE STATEMENT MADE, IN LIGHT OF THE CIRCUMSTANCES UNDERWHICH THEY WERE MADE, NOT MISLEADING. THE FIRM'S WRITTENSUPERVISORY PROCEDURES EXPRESSLY REGISTEREDREPRESENTATIVES FROM EXERCISING DISCRETION WITHOUT PRIORWRITTEN AUTHORIZATION FROM THE CLIENT AND APPROVAL FROM THEFIRM; NEVERTHELESS, WITH THE FIRM'S KNOWLEDGE, THE CCM GROUPEXERCISED DISCRETION TO BUY OR SELL ARS IN DOZENS OFTRANSACTIONS INVOLVING THEIR DISCRETIONARY CLIENTS WITHOUTHAVING WRITTEN AUTHORIZATION FROM THESE CLIENTS OR WRITTENAPPROVAL FROM THE FIRM. THE FIRM WAS OBLIGATED, BUT FAILED, TODELIVER TO THE DISCRETIONARY CLIENTS COPIES OF THE OFFICIALSTATEMENTS IN CONNECTION WITH TRANSACTIONS FOR NEW ISSUES OFMUNICIPAL SECURITIES. THE FIRM USED MISLEADING COMMUNICATIONSWITH THE PUBLIC WHEN THREE DIFFERENT PIECES OF SALES MATERIALSIN CONNECTION WITH ARS TRANSACTIONS MISREPRESENTED THENATURE OF ARS; THESE DOCUMENTS INCLUDE AN ARS PITCHBOOK,MONTHLY CASH MANAGEMENT STATEMENTS, AND A THREE PAGEINVESTMENT PROPOSAL GIVEN TO A CUSTOMER. THE FIRM FAILED TOSATISFY THE CONDUCTIONS OF RULE 144A SAFE HARBOR FORPERMITTING THE SALE OF UNREGISTERED SECURITIES TO QUALIFIEDINSTITUTIONAL BUYER, WHEN IT SOLD UNREGISTERED SECURITIES TO ACUSTOMER IN CONTRAVENTION OF SECTION 5 OF THE SECURITIES ACTOF 1933 WHICH PROHIBITS THE SALE OF UNREGISTERED SECURITIESTHAT ARE NOT OTHERWISE EXEMPT FROM REGISTRATION. THE FIRMFAILED TO IMPLEMENT OR ENFORCE AN AGREED UPON INFORMATIONBARRIER, WHEN ITS REPRESENTATIVE ON THE BOARD OF DIRECTORSFOR WHICH IT HAD AN EQUITY INTEREST, AND WAS UNAWARE OF THEBARRIER BREACHED THE BARRIER BY COMMUNICATING WITH THEINVESTMENT BANKING TEAM, INCLUDING IN INSTANCES WHERE HESHARED THE CONFIDENTIAL THOUGHTS AND DELIBERATIONS OF THEBOARD. THE CCM GROUP EXECUTED APPROXIMATELY 760 ARS TRADES,INCLUDING FOR MUNICIPAL SECURITY ARS; THESE TRADES WERE ONBEHALF OF BOTH CCM AND PRIVATE CLIENT SERVICES (PCS) CLIENTS.(CONT. IN COMMENTS SECTION)







Initiated By: FINRA


Other


N/A




Other Product Type(s): STUDENT LOAN, MUNICIPAL, AND PREFERRED ARSUNREGISTERED SECURITIES

SECTION 17(A)(2) OF THE SECURITIES ACT OF 1933, SEC RULE 17A-3,NASD RULES 2110, 2210, 2211, 2510, 3010, 3110 AND MSRB RULES G-8, G-17,G-21, G-27, G-32: THE FIRM ACTED AS A "DOWNSTREAM" BROKER OFAUCTION RATE SECURITIES (ARS) AND SOLD IN EXCESS OF ONE BILLIONDOLLARS OF STUDENT LOAN, MUNICIPAL, AND PREFERRED ARS TOCUSTOMERS. SHORTLY AFTER MOST OF THE ARS MARKETS HAD BECOMEILLIQUID, APPROXIMATELY $845 MILLION OF ARS WAS HELD IN ACCOUNTSAT THE FIRM, APPROXIMATELY $659 MILLION OF WHICH WAS HELD BY ITSCORPORATE CASH MANAGEMENT (CCM) GROUP CUSTOMERS. THEGROUP PROVIDED INVESTMENT ADVICE, RECOMMENDATIONS ANDBROKERAGE SERVICES FOR CORPORATE CLIENTS WITH SHORT-TERMINVESTMENT PORTFOLIOS. BECAUSE TWO OF THE FIRM'S REGISTEREDREPRESENTATIVES EXERCISED DISCRETION IN SELECTING WHICHPARTICULAR ARS TO BUY AND SELL FOR THE DISCRETIONARY CLIENTS,THE FIRM AND THESE REGISTERED REPRESENTATIVES BECAMEOBLIGATED BUT FAILED TO DISCLOSE TO THE DISCRETIONARY CLIENTSMATERIAL FACTS RELATING TO EACH COMPLETED TRANSACTION,SPECIFICALLY THE ADDITIONAL COMPENSATION THEY EARNED ONPURCHASES OF NEW ISSUE ARS, THE DUAL ROLE THEY PLAYED INEFFECTING TRANSACTIONS BETWEEN THE DISCRETIONARY CLIENTS'ACCOUNTS AND OTHER CORPORATE CASH MANAGEMENT CLIENTS, ANDTHE EXISTENCE OF ARS THAT PROVIDED HIGHER YIELDS AT THE TIMETHEY COMPLETED THE NEW ISSUE AND INTER-CLIENT TRANSACTIONS.THE FIRM VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT OF 1933WHEN IT FAILED TO DISCLOSE MATERIAL FACTS TO CUSTOMERS OROMITTED MATERIAL FACTS IN CONNECTION WITH RELEVANT BUSINESSAND MANAGEMENT INFORMATION CONCERNING ARS AND THIS RULEMAKES IT UNLAWFUL FOR ANY PERSON IN THE OFFER OR SALE OF ANYSECURITIES BY THE USE OF ANY MEANS OR INSTRUMENTS OFTRANSACTION OR COMMUNICATION IN INTERSTATE COMMERCE OR BYUSE OF THE MAILS, DIRECTLY OR INDIRECTLY TO OBTAIN MONEY ORPROPERTY BY MEANS OF ANY UNTRUE STATEMENT OF A MATERIAL FACTOR ANY OMISSION TO STATE A MATERIAL FACT NECESSARY IN ORDER TOMAKE THE STATEMENT MADE, IN LIGHT OF THE CIRCUMSTANCES UNDERWHICH THEY WERE MADE, NOT MISLEADING. THE FIRM'S WRITTENSUPERVISORY PROCEDURES EXPRESSLY REGISTEREDREPRESENTATIVES FROM EXERCISING DISCRETION WITHOUT PRIORWRITTEN AUTHORIZATION FROM THE CLIENT AND APPROVAL FROM THEFIRM; NEVERTHELESS, WITH THE FIRM'S KNOWLEDGE, THE CCM GROUPEXERCISED DISCRETION TO BUY OR SELL ARS IN DOZENS OFTRANSACTIONS INVOLVING THEIR DISCRETIONARY CLIENTS WITHOUTHAVING WRITTEN AUTHORIZATION FROM THESE CLIENTS OR WRITTENAPPROVAL FROM THE FIRM. THE FIRM WAS OBLIGATED, BUT FAILED, TODELIVER TO THE DISCRETIONARY CLIENTS COPIES OF THE OFFICIALSTATEMENTS IN CONNECTION WITH TRANSACTIONS FOR NEW ISSUES OFMUNICIPAL SECURITIES. THE FIRM USED MISLEADING COMMUNICATIONSWITH THE PUBLIC WHEN THREE DIFFERENT PIECES OF SALES MATERIALSIN CONNECTION WITH ARS TRANSACTIONS MISREPRESENTED THENATURE OF ARS; THESE DOCUMENTS INCLUDE AN ARS PITCHBOOK,MONTHLY CASH MANAGEMENT STATEMENTS, AND A THREE PAGEINVESTMENT PROPOSAL GIVEN TO A CUSTOMER. THE FIRM FAILED TOSATISFY THE CONDUCTIONS OF RULE 144A SAFE HARBOR FORPERMITTING THE SALE OF UNREGISTERED SECURITIES TO QUALIFIEDINSTITUTIONAL BUYER, WHEN IT SOLD UNREGISTERED SECURITIES TO ACUSTOMER IN CONTRAVENTION OF SECTION 5 OF THE SECURITIES ACTOF 1933 WHICH PROHIBITS THE SALE OF UNREGISTERED SECURITIESTHAT ARE NOT OTHERWISE EXEMPT FROM REGISTRATION. THE FIRMFAILED TO IMPLEMENT OR ENFORCE AN AGREED UPON INFORMATIONBARRIER, WHEN ITS REPRESENTATIVE ON THE BOARD OF DIRECTORSFOR WHICH IT HAD AN EQUITY INTEREST, AND WAS UNAWARE OF THEBARRIER BREACHED THE BARRIER BY COMMUNICATING WITH THEINVESTMENT BANKING TEAM, INCLUDING IN INSTANCES WHERE HESHARED THE CONFIDENTIAL THOUGHTS AND DELIBERATIONS OF THEBOARD. THE CCM GROUP EXECUTED APPROXIMATELY 760 ARS TRADES,INCLUDING FOR MUNICIPAL SECURITY ARS; THESE TRADES WERE ONBEHALF OF BOTH CCM AND PRIVATE CLIENT SERVICES (PCS) CLIENTS.(CONT. IN COMMENTS SECTION)








N/A


Resolution:

Other Sanctions Ordered: REMEDIATION AND UNDERTAKING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED, FINED $1,500,000 ($650,000 OFWHICH PERTAIN TO THE VIOLATIONS OF MSRB RULES G-8, G-17, G-21, G-27, AND G-32), AND PAYMENT OF APPROXIMATELY $425,000 INREMEDIATION TO CERTAIN CUSTOMERS OF THE CCM GROUP WHOPURCHASED OR HELD ARS IN ACCOUNTS AT THE FIRM DURING THEPERIOD JANUARY 1, 2007 THROUGH JULY 31, 2008, SUCH PAYMENTREPRESENTING ALL COMMISSIONS AND FEES EARNED BY THE FIRM ONSUCH CUSTOMERS' ARS PURCHASES OR HOLDINGS DURING THEFOREGOING PERIOD. THE CUSTOMERS AND PAYMENT AMOUNTS AREIDENTIFIED ON A SCHEDULE PREVIOUSLY PROVIDED BY THE FIRM TOFINRA. THE FIRM AGREES TO PROVIDE SATISFACTORY PROOF OFPAYMENT, OR OF REASONABLE AND DOCUMENTED EFFORTSUNDERTAKEN TO EFFECT PAYMENT, TO FINRA NO LATER THAN THIRTYDAYS AFTER THE ISSUANCE OF THIS AWC. BUYBACK OFFER: THE FIRMOFFER TO PURCHASE AT PAR AUCTION RATE SECURITIES (ARS) SUBJECTTO AUCTIONS THAT HAVE NOT BEEN SUCCESSFUL AS OF THE DATE OFTHIS AWC AND ARE NOT SUBJECT TO CURRENT CALLS OR REDEMPTIONS(ELIGIBLE ARS) FROM ALL INVESTORS IN THE RELEVANT CLASS THATHAVE NOT PREVIOUSLY HAD THEIR ARS REPURCHASED BY THE FIRM AS ARESULT OF ITS VOLUNTARY BUYBACKS OR OTHER REMEDIAL EFFORTS.FOR THE PURPOSE OF THIS AWC, THE RELEVANT CLASS SHALL BECOMPRISED OF ALL INDIVIDUAL INVESTORS WHO PURCHASE ELIGIBLEARS FROM THE FIRM ANY TIME BETWEEN MAY 31, 2006 AND FEBRUARY 28,2008 INTO ACCOUNTS MAINTAINED AT THE FIRM, WITH THE EXCEPTION OFTWO INDIVIDUALS WHOSE NAMES HAVE BEEN SEPARATELY IDENTIFIED INA COMMUNICATION BETWEEN THE FIRM AND FINRA DATE MARCH 2, 2011.

Regulator Statement OVER HALF OF THESE TRADES HAD DEFICIENT OR MISSING ORDERTICKETS, INCLUDING THE FAILURE TO INDICATE WHETHER THE TRADEWAS EXECUTED ON PRINCIPAL OR AGENCY BASIS AND WHETHER THETRADE WAS SOLICITED OR UNSOLICITED. THE FIRM FAILED TO ESTABLISHAND MAINTAIN PROCEDURES FOR THE CCM GROUP THAT WEREREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE FEDERALSECURITIES LAWS AND APPLICABLE NASD AND MSRB RULES. THE FIRMWRITTEN SUPERVISORY PROCEDURES FOR THE CCM GROUP, FAILED TOHAVE PROCEDURES IN PLACE TO ENSURE ADEQUATE DISCLOSURE TOCCM GROUP CUSTOMERS, AND FAILED TO HAVE ADEQUATE SYSTEMSAND PROCEDURES IN PLACE TO ENSURE THAT WRITTEN AUTHORITY WASOBTAINED FOR DISCRETIONARY CLIENTS, THAT DELIVERY OF OFFICIALSTATEMENTS ON NEW ISSUE MUNICIPAL ARS WAS MADE, THAT CCMGROUP'S ADVERTISING AND SALES MATERIALS BE ADEQUATELYREVIEWED; THAT RULE 144A PAPER ONLY BE SOLD TO QUALIFIEDCUSTOMERS; AND, THAT ARS ORDER TICKETS WERE ADEQUATELYCOMPLETED.


Yes








Regulator Statement OVER HALF OF THESE TRADES HAD DEFICIENT OR MISSING ORDERTICKETS, INCLUDING THE FAILURE TO INDICATE WHETHER THE TRADEWAS EXECUTED ON PRINCIPAL OR AGENCY BASIS AND WHETHER THETRADE WAS SOLICITED OR UNSOLICITED. THE FIRM FAILED TO ESTABLISHAND MAINTAIN PROCEDURES FOR THE CCM GROUP THAT WEREREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE FEDERALSECURITIES LAWS AND APPLICABLE NASD AND MSRB RULES. THE FIRMWRITTEN SUPERVISORY PROCEDURES FOR THE CCM GROUP, FAILED TOHAVE PROCEDURES IN PLACE TO ENSURE ADEQUATE DISCLOSURE TOCCM GROUP CUSTOMERS, AND FAILED TO HAVE ADEQUATE SYSTEMSAND PROCEDURES IN PLACE TO ENSURE THAT WRITTEN AUTHORITY WASOBTAINED FOR DISCRETIONARY CLIENTS, THAT DELIVERY OF OFFICIALSTATEMENTS ON NEW ISSUE MUNICIPAL ARS WAS MADE, THAT CCMGROUP'S ADVERTISING AND SALES MATERIALS BE ADEQUATELYREVIEWED; THAT RULE 144A PAPER ONLY BE SOLD TO QUALIFIEDCUSTOMERS; AND, THAT ARS ORDER TICKETS WERE ADEQUATELYCOMPLETED.


Initiated By: FINRA






Other Product Type(s): STUDENT LOAN, MUNICIPAL AND PREFERRED AUCTION RATE SECURITIES

Allegations: WITHOUT ADMITTING OR DENYING ANY ALLEGATIONS, JEFFERIES HASAGREED TO FINDINGS THAT, WITH REGARD TO CERTAIN CUSTOMERS, ITVIOLATED FINRA RULES AND/OR MSRB RULES, INSOFAR AS JEFFERIES (A)MADE NEGLIGENT OMISSIONS OF MATERIAL FACTS TO CERTAININSTITUTIONAL CUSTOMERS RELATING TO AUCTION RATE SECURITIES,(B) EXERCISED DISCRETION WITHOUT WRITTEN AUTHORITY REGARDINGCERTAIN INSTITUTIONAL CUSTOMERS, (C) FAILED TO DELIVER OFFICIALSTATEMENTS ON MUNICIPAL NEW ISSUE AUCTION RATE SECURITIES TOCERTAIN INSTITUTIONAL CUSTOMERS, (D) USED MISLEADINGCOMMUNICATIONS WITH THE PUBLIC, (E) SOLD RESTRICTED SECURITIESTO A NON-QUALIFIED CUSTOMER, (E) FAILED TO IMPLEMENT ANDENFORCE AN AGREED-UPON INFORMATION BARRIER, (F) FAILED TOCREATE AND MAINTAIN ACCURATE ORDER TICKETS, (G) FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY PROCEDURES.











CENSURE, REMEDIATION AND UNDERTAKING


Resolution:

Other Sanctions Ordered: REMEDIATION AND UNDERTAKING

Sanction Details: PURSUANT TO THE SETTLEMENT, JEFFERIES WAS REQUIRED TO PAYFINRA A FINE OF $1,500,000, AND MAKE REMEDIAL PAYMENTS OF $425,000TO CERTAIN INSTITUTIONAL CUSTOMERS OF THE JEFFERIES' CORPORATECASH MANAGEMENT GROUP. THE SETTLEMENT ALSO REQUIRESJEFFERIES TO REIMBURSE ELIGIBLE PURCHASERS WHO SOLD THEIRAUCTION RATE SECURITIES AT A PRICE BELOW PAR, AND TO SUBMIT ANYCLAIMS FOR CONSEQUENTIAL DAMAGES TO THE FINRA SPECIALARBITRATION PROGRAM PROCEEDINGS.



Disclosure 50 of 85

i


Allegations: SEC RULE 15C2-11, NASD RULES 2110, 2111(A), 2320, 3010, 6130(B), 6640,6955(A) - JEFFERIES & COMPANY, INC. TRANSMITTED ROUTE ORCOMBINED ORDER/ROUTE REPORTS TO THE ORDER AUDIT TRAIL SYSTEM(OATS) THAT THE OATS SYSTEM WAS UNABLE TO LINK TO THE RELATEDORDER ROUTED TO THE NASD/NASDAQ TRADE REPORTING FACILITY DUETO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA. THEFIRM FAILED TO EXECUTE ORDERS FULLY AND PROMPTLY. INTRANSACTIONS FOR OR WITH A CUSTOMER, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLEUNDER PREVAILING MARKET CONDITIONS. THE FIRM PUBLISHEDQUOTATIONS FOR AN OTC EQUITY SECURITY OR A NON-EXCHANGE-LISTED SECURITY, OR, DIRECTLY OR INDIRECTLY, SUBMITTED SUCHQUOTATION FOR PUBLICATION IN A QUOTATION MEDIUM (THE PINKSHEETS, LLC) AND DID NOT HAVE IN ITS RECORDS THE DOCUMENTATIONAND INFORMATION REQUIRED BY SEC RULE 15C2-11(A)("PARAGRAPH (A)INFORMATION"), AND BASED UPON A REVIEW OF THE PARAGRAPH(A)INFORMATION, DID NOT HAVE A REASONABLE BASIS UNDER THECIRCUMSTANCES FOR BELIEVING THAT THE PARAGRAPH (A)INFORMATION WAS ACCURATE IN ALL MATERIAL RESPECTS AND THESOURCES OF THE PARAGRAPH (A) INFORMATION WERE RELIABLE; THEQUOTATIONS DID NOT REPRESENT A CUSTOMER'S INDICATION OFUNSOLICITED INTEREST. FOR EACH QUOTATION, THE FIRM FAILED TO FILEA FORM 211 WITH FINRA AT LEAST THREE BUSINESS DAYS BEFORE THEQUOTATION WAS PUBLISHED OR DISPLAYED IN A QUOTATION MEDIUM.THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND NASD RULES CONCERNING THEPUBLISHING OF QUOTATIONS ON THE PINK SHEETS, LLC RELATING TOUNSOLICITED CUSTOMER ORDERS RECEIVED FROM ANOTHER BROKER-DEALER. THE FIRM FAILED TO ACCEPT OR DECLINE IN THE FINRA/NASDAQTRADE REPORTING FACILITY TRANSACTIONS IN REPORTABLESECURITIES WITHIN 20 MINUTES AFTER EXECUTION THAT THE FIRM HADAND OBLIGATION TO ACCEPT OR DECLINE AS THE ORDER ENTRYIDENTIFIER (OEID).







Initiated By: FINRA





Principal Product Type: Equity - OTC

Other Product Type(s): NON-EXCHANGE-LISTED SECURITY, REPORTABLE SECURITIES

SEC RULE 15C2-11, NASD RULES 2110, 2111(A), 2320, 3010, 6130(B), 6640,6955(A) - JEFFERIES & COMPANY, INC. TRANSMITTED ROUTE ORCOMBINED ORDER/ROUTE REPORTS TO THE ORDER AUDIT TRAIL SYSTEM(OATS) THAT THE OATS SYSTEM WAS UNABLE TO LINK TO THE RELATEDORDER ROUTED TO THE NASD/NASDAQ TRADE REPORTING FACILITY DUETO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA. THEFIRM FAILED TO EXECUTE ORDERS FULLY AND PROMPTLY. INTRANSACTIONS FOR OR WITH A CUSTOMER, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLEUNDER PREVAILING MARKET CONDITIONS. THE FIRM PUBLISHEDQUOTATIONS FOR AN OTC EQUITY SECURITY OR A NON-EXCHANGE-LISTED SECURITY, OR, DIRECTLY OR INDIRECTLY, SUBMITTED SUCHQUOTATION FOR PUBLICATION IN A QUOTATION MEDIUM (THE PINKSHEETS, LLC) AND DID NOT HAVE IN ITS RECORDS THE DOCUMENTATIONAND INFORMATION REQUIRED BY SEC RULE 15C2-11(A)("PARAGRAPH (A)INFORMATION"), AND BASED UPON A REVIEW OF THE PARAGRAPH(A)INFORMATION, DID NOT HAVE A REASONABLE BASIS UNDER THECIRCUMSTANCES FOR BELIEVING THAT THE PARAGRAPH (A)INFORMATION WAS ACCURATE IN ALL MATERIAL RESPECTS AND THESOURCES OF THE PARAGRAPH (A) INFORMATION WERE RELIABLE; THEQUOTATIONS DID NOT REPRESENT A CUSTOMER'S INDICATION OFUNSOLICITED INTEREST. FOR EACH QUOTATION, THE FIRM FAILED TO FILEA FORM 211 WITH FINRA AT LEAST THREE BUSINESS DAYS BEFORE THEQUOTATION WAS PUBLISHED OR DISPLAYED IN A QUOTATION MEDIUM.THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND NASD RULES CONCERNING THEPUBLISHING OF QUOTATIONS ON THE PINK SHEETS, LLC RELATING TOUNSOLICITED CUSTOMER ORDERS RECEIVED FROM ANOTHER BROKER-DEALER. THE FIRM FAILED TO ACCEPT OR DECLINE IN THE FINRA/NASDAQTRADE REPORTING FACILITY TRANSACTIONS IN REPORTABLESECURITIES WITHIN 20 MINUTES AFTER EXECUTION THAT THE FIRM HADAND OBLIGATION TO ACCEPT OR DECLINE AS THE ORDER ENTRYIDENTIFIER (OEID).


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED A TOTAL OF $110,000,ORDERED TO PAY $4,786.83, PLUS INTEREST, IN RESTITUTION TOINVESTORS AND REVISE ITS WRITTEN SUPERVISORY PROCEDURESREGARDING THE PUBLISHING OF QUOTATIONS ON THE PINK SHEETS, LLCRELATING TO UNSOLICITED CUSTOMER ORDERS RECEIVED FROMANOTHER BROKER-DEALER WITHIN 30 BUSINESS DAYS OF ACCEPTANCEOF THIS AWC BY THE NAC. A REGISTERED PRINCIPAL OF THE FIRM SHALLSUBMIT SATISFACTORY PROOF OF PAYMENT OF THE RESTITUTION OR OFREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION TO FINRA NO LATER THAN 120 DAYS AFTER ACCEPTANCEOF THIS AWC. ANY UNDISTRIBUTED RESTITUTION AND INTEREST SHALLBE FORWARDED TO THE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTYOR ABANDONED PROPERTY FUND FOR THE STATE IN WHICH THECUSTOMER LAST RESIDED.


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED A TOTAL OF $110,000,ORDERED TO PAY $4,786.83, PLUS INTEREST, IN RESTITUTION TOINVESTORS AND REVISE ITS WRITTEN SUPERVISORY PROCEDURESREGARDING THE PUBLISHING OF QUOTATIONS ON THE PINK SHEETS, LLCRELATING TO UNSOLICITED CUSTOMER ORDERS RECEIVED FROMANOTHER BROKER-DEALER WITHIN 30 BUSINESS DAYS OF ACCEPTANCEOF THIS AWC BY THE NAC. A REGISTERED PRINCIPAL OF THE FIRM SHALLSUBMIT SATISFACTORY PROOF OF PAYMENT OF THE RESTITUTION OR OFREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION TO FINRA NO LATER THAN 120 DAYS AFTER ACCEPTANCEOF THIS AWC. ANY UNDISTRIBUTED RESTITUTION AND INTEREST SHALLBE FORWARDED TO THE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTYOR ABANDONED PROPERTY FUND FOR THE STATE IN WHICH THECUSTOMER LAST RESIDED.


Allegations: SEC RULE 15C2-11, NASD RULES 2110, 2111(A), 2320, 3010, 6130(B), 6640,6955(A) - JEFFERIES & COMPANY, INC. TRANSMITTED ROUTE ORCOMBINED ORDER/ROUTE REPORTS TO THE ORDER AUDIT TRAIL SYSTEM(OATS) THAT THE OATS SYSTEM WAS UNABLE TO LINK TO THE RELATEDORDER ROUTED TO THE NASD/NASDAQ TRADE REPORTING FACILITY DUETO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA. THEFIRM FAILED TO EXECUTE ORDERS FULLY AND PROMPTLY. INTRANSACTIONS FOR OR WITH A CUSTOMER, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLEUNDER PREVAILING MARKET CONDITIONS. THE FIRM PUBLISHEDQUOTATIONS FOR AN OTC EQUITY SECURITY OR A NON-EXCHANGE-LISTED SECURITY, OR, DIRECTLY OR INDIRECTLY, SUBMITTED SUCHQUOTATION FOR PUBLICATION IN A QUOTATION MEDIUM (THE PINKSHEETS, LLC) AND DID NOT HAVE IN ITS RECORDS THE DOCUMENTATIONAND INFORMATION REQUIRED BY SEC RULE 15C2-11(A)("PARAGRAPH (A)INFORMATION"), AND BASED UPON A REVIEW OF THE INFORMATION, DIDNOT HAVE A REASONABLE BASIS UNDER THE CIRCUMSTANCES FORBELIEVING THAT THE PARAGRAPH (A) INFORMATION WAS ACCURATE INALL MATERIAL RESPECTS AND THE SOURCES OF THE PARAGRAPH (A)INFORMATION WERE RELIABLE; THE QUOTATIONS DID NOT REPRESENT ACUSTOMER'S INDICATION OF UNSOLICITED INTEREST. FOR EACHQUOTATION, THE FIRM FAILED TO FILE A FORM 211 WITH FINRA AT LEASTTHREE BUSINESS DAYS BEFORE THE QUOTATION WAS PUBLISHED ORDISPLAYED IN A QUOTATION MEDIUM. THE FIRM'S SUPERVISORY SYSTEMDID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES CONCERNING THE PUBLISHING OFQUOTATIONS ON THE PINK SHEETS, LLC RELATING TO UNSOLICITEDCUSTOMER ORDERS RECEIVED FROM ANOTHER BROKER-DEALER. THEFIRM FAILED TO ACCEPT OR DECLINE IN THE FINRA/NASDAQ TRADEREPORTING FACILITY TRANSACTIONS IN REPORTABLE SECURITIESWITHIN 20 MINUTES AFTER EXECUTION THAT THE FIRM HAD ANDOBLIGATION TO ACCEPT OR DECLINE AS THE ORDER ENTRY IDENTIFIER(OEID).







Initiated By: FINRA


Censure





Other Product Type(s): NON-EXCHANGE-LISTED SECURITY, REPORTABLE SECURITIES

SEC RULE 15C2-11, NASD RULES 2110, 2111(A), 2320, 3010, 6130(B), 6640,6955(A) - JEFFERIES & COMPANY, INC. TRANSMITTED ROUTE ORCOMBINED ORDER/ROUTE REPORTS TO THE ORDER AUDIT TRAIL SYSTEM(OATS) THAT THE OATS SYSTEM WAS UNABLE TO LINK TO THE RELATEDORDER ROUTED TO THE NASD/NASDAQ TRADE REPORTING FACILITY DUETO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA. THEFIRM FAILED TO EXECUTE ORDERS FULLY AND PROMPTLY. INTRANSACTIONS FOR OR WITH A CUSTOMER, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLEUNDER PREVAILING MARKET CONDITIONS. THE FIRM PUBLISHEDQUOTATIONS FOR AN OTC EQUITY SECURITY OR A NON-EXCHANGE-LISTED SECURITY, OR, DIRECTLY OR INDIRECTLY, SUBMITTED SUCHQUOTATION FOR PUBLICATION IN A QUOTATION MEDIUM (THE PINKSHEETS, LLC) AND DID NOT HAVE IN ITS RECORDS THE DOCUMENTATIONAND INFORMATION REQUIRED BY SEC RULE 15C2-11(A)("PARAGRAPH (A)INFORMATION"), AND BASED UPON A REVIEW OF THE INFORMATION, DIDNOT HAVE A REASONABLE BASIS UNDER THE CIRCUMSTANCES FORBELIEVING THAT THE PARAGRAPH (A) INFORMATION WAS ACCURATE INALL MATERIAL RESPECTS AND THE SOURCES OF THE PARAGRAPH (A)INFORMATION WERE RELIABLE; THE QUOTATIONS DID NOT REPRESENT ACUSTOMER'S INDICATION OF UNSOLICITED INTEREST. FOR EACHQUOTATION, THE FIRM FAILED TO FILE A FORM 211 WITH FINRA AT LEASTTHREE BUSINESS DAYS BEFORE THE QUOTATION WAS PUBLISHED ORDISPLAYED IN A QUOTATION MEDIUM. THE FIRM'S SUPERVISORY SYSTEMDID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES CONCERNING THE PUBLISHING OFQUOTATIONS ON THE PINK SHEETS, LLC RELATING TO UNSOLICITEDCUSTOMER ORDERS RECEIVED FROM ANOTHER BROKER-DEALER. THEFIRM FAILED TO ACCEPT OR DECLINE IN THE FINRA/NASDAQ TRADEREPORTING FACILITY TRANSACTIONS IN REPORTABLE SECURITIESWITHIN 20 MINUTES AFTER EXECUTION THAT THE FIRM HAD ANDOBLIGATION TO ACCEPT OR DECLINE AS THE ORDER ENTRY IDENTIFIER(OEID).


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $110,000, ORDERED TO PAY$4,757.44, PLUS INTEREST, IN RESTITUTION TO INVESTORS AND REVISEITS WRITTEN SUPERVISORY PROCEDURES.



Disclosure 51 of 85

i


Allegations: SEC RULES 10B-10, 17A-3, 17A-4, NASD RULES 2110, 3010, 3110,4632(A)(5)(G), 6130, 6955(A) - JEFFERIES & COMPANY, INC. FAILED TOREPORT TO THE NASD/NASDAQ TRADE REPORTING FACILITY (FNTRF):THE CORRECT SYMBOL INDICATING WHETHER TRANSACTIONS WEREBUY, SELL, SELL SHORT OR CROSS FOR TRANSACTIONS IN REPORTABLESECURITIES; FAILED TO REPORT THE CORRECT .PRP TIME FOR ONETRANSACTION IN A REPORTABLE SECURITY; FAILED TO REPORT THECORRECT CAPACITY FOR AGENCY CROSS TRANSACTIONS; FAILED TOREPORT ONE LAST SALE REPORT OF A TRANSACTION IN A DESIGNATEDSECURITY; FAILED TO REPORT THE CANCELLATION OF TRADESPREVIOUSLY SUBMITTED; FAILED TO SUBMIT FOR THE OFFSETTING, "RISKLESS" PORTION OF RISKLESS PRINCIPAL TRANSACTIONS INDESIGNATED SECURITIES, EITHER A CLEARING-ONLY REPORT WITH ACAPACITY INDICATOR OF "RISKLESS PRINCIPAL," OR A NON-TAPE, NON-CLEARING REPORT WITH A CAPACITY INDICATOR OF "RISKLESSPRINCIPAL;" INCORRECTLY SUBMITTED FOR THE OFFSETTING, RISKLESSPORTION OF ONE RISKLESS PRINCIPAL TRANSACTION IN A DESIGNATEDSECURITY, A TAPE OR "MEDIA" REPORT WITH A CAPACITY INDICATOR OF "PRINCIPAL;" INCORRECTLY REPORTED IN AN AGENCY CAPACITY THEPRINCIPAL LEG OF RISKLESS PRINCIPAL TRANSACTIONS; AND FAILED TOREPORT THE CORRECT CAPACITY FOR PRINCIPAL TRANSACTIONS. THEFIRM INACCURATELY REPORTED TO THE OTC REPORTING FACILITY(OTCRF) THE CAPACITY FOR THE STREET LEG OF RISKLESS PRINCIPALTRANSACTIONS; INACCURATELY REPORTED TO THE OTCRF THECAPACITY FOR THE STREET LEG OF RISKLESS PRINCIPAL TRANSACTIONSWHILE ALSO INACCURATELY MEDIA-REPORTING THE CUSTOMER LEG OFTHE SAME RISKLESS PRINCIPAL TRANSACTIONS; INACCURATELY MEDIA-REPORTED TO THE OTCRF THE CUSTOMER LEG OF ONE RISKLESSPRINCIPAL TRANSACTION; FAILED TO REPORT THE CORRECT CAPACITYFOR ONE PRINCIPAL TRANSACTION; DOUBLE MEDIA-REPORTEDSEPARATE TRANSACTIONS; AND FAILED TO REPORT THE CORRECTCAPACITY FOR ONE RISKLESS PRINCIPAL TRANSACTION. THE FIRMTRANSMITTED REPORTS TO THE ORDER AUDIT TRAIL SYSTEM (OATS)THAT CONTAINED INACCURATE, INCOMPLETE OR IMPROPERLYFORMATTED. THE FIRM FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO ITS CUSTOMERS ITS CORRECT CAPACITY INTRANSACTIONS; FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO CUSTOMERS THAT TRANSACTIONS WERE EXECUTED ATAN AVERAGE PRICE; FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO ITS CUSTOMERS ITS CORRECT CAPACITY IN THETRANSACTIONS, THAT THE TRANSACTIONS WERE EXECUTED AT ANAVERAGE PRICE AND THAT IT WAS A MARKET MAKER IN EACH SUCHSECURITY; FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TOITS CUSTOMERS ITS CORRECT CAPACITY IN TRANSACTIONS AND THECORRECT FORM OF REMUNERATION; FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING ALL THE CAPACITIES IN WHICH IT EXECUTEDMULTIPLE-CAPACITY TRANSACTIONS; FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING THE CORRECT FORM OF REMUNERATION;AND, ON ONE OCCASION, FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO A CUSTOMER THAT IT WAS A MARKET MAKER IN THESECURITY. THE FIRM FAILED TO CORRECTLY MARK ITS TRADING LEDGERAS "LONG" OR "SHORT"; FAILED TO SHOW THE TERMS AND CONDITIONSON BROKERAGE ORDER MEMORANDA; AND FAILED TO PRESERVE FOR APERIOD OF NOT LESS THAN THREE YEARS, THE FIRST TWO IN ANACCESSIBLE PLACE, ONE BROKERAGE ORDER MEMORANDA. THE FIRMFAILED TO REPORT TO THE FINRA/ NASDAQ TRADE REPORTING FACILITY(FNTRF): THE CORRECT CAPACITY IN WHICH IT EXECUTEDTRANSACTIONS IN REPORTABLE SECURITIES; THE CORRECT EXECUTIONTIME FOR TRANSACTIONS IN REPORTABLE SECURITIES; AND FAILED TOCORRECTLY REPORT RISKLESS PRINCIPAL TRADES, THRICE BY MEDIA-REPORTING THE CUSTOMER LEG AS PRINCIPAL AND ONCE BY FAILING TOSIMPLY SUBMIT A RISKLESS PRINCIPAL CLEARING ENTRY AS REQUIRED.THE FIRM INCORRECTLY DESIGNED AS".PRP" TO THE FNTRF LAST SALEREPORTS OF TRANSACTIONS IN DESIGNATED SECURITIES. [CONTINUEDIN COMMENTS]







Initiated By: FINRA






Other Product Type(s): REPORTABLE SECURITIES, DESIGNATED SECURITIES

SEC RULES 10B-10, 17A-3, 17A-4, NASD RULES 2110, 3010, 3110,4632(A)(5)(G), 6130, 6955(A) - JEFFERIES & COMPANY, INC. FAILED TOREPORT TO THE NASD/NASDAQ TRADE REPORTING FACILITY (FNTRF):THE CORRECT SYMBOL INDICATING WHETHER TRANSACTIONS WEREBUY, SELL, SELL SHORT OR CROSS FOR TRANSACTIONS IN REPORTABLESECURITIES; FAILED TO REPORT THE CORRECT .PRP TIME FOR ONETRANSACTION IN A REPORTABLE SECURITY; FAILED TO REPORT THECORRECT CAPACITY FOR AGENCY CROSS TRANSACTIONS; FAILED TOREPORT ONE LAST SALE REPORT OF A TRANSACTION IN A DESIGNATEDSECURITY; FAILED TO REPORT THE CANCELLATION OF TRADESPREVIOUSLY SUBMITTED; FAILED TO SUBMIT FOR THE OFFSETTING, "RISKLESS" PORTION OF RISKLESS PRINCIPAL TRANSACTIONS INDESIGNATED SECURITIES, EITHER A CLEARING-ONLY REPORT WITH ACAPACITY INDICATOR OF "RISKLESS PRINCIPAL," OR A NON-TAPE, NON-CLEARING REPORT WITH A CAPACITY INDICATOR OF "RISKLESSPRINCIPAL;" INCORRECTLY SUBMITTED FOR THE OFFSETTING, RISKLESSPORTION OF ONE RISKLESS PRINCIPAL TRANSACTION IN A DESIGNATEDSECURITY, A TAPE OR "MEDIA" REPORT WITH A CAPACITY INDICATOR OF "PRINCIPAL;" INCORRECTLY REPORTED IN AN AGENCY CAPACITY THEPRINCIPAL LEG OF RISKLESS PRINCIPAL TRANSACTIONS; AND FAILED TOREPORT THE CORRECT CAPACITY FOR PRINCIPAL TRANSACTIONS. THEFIRM INACCURATELY REPORTED TO THE OTC REPORTING FACILITY(OTCRF) THE CAPACITY FOR THE STREET LEG OF RISKLESS PRINCIPALTRANSACTIONS; INACCURATELY REPORTED TO THE OTCRF THECAPACITY FOR THE STREET LEG OF RISKLESS PRINCIPAL TRANSACTIONSWHILE ALSO INACCURATELY MEDIA-REPORTING THE CUSTOMER LEG OFTHE SAME RISKLESS PRINCIPAL TRANSACTIONS; INACCURATELY MEDIA-REPORTED TO THE OTCRF THE CUSTOMER LEG OF ONE RISKLESSPRINCIPAL TRANSACTION; FAILED TO REPORT THE CORRECT CAPACITYFOR ONE PRINCIPAL TRANSACTION; DOUBLE MEDIA-REPORTEDSEPARATE TRANSACTIONS; AND FAILED TO REPORT THE CORRECTCAPACITY FOR ONE RISKLESS PRINCIPAL TRANSACTION. THE FIRMTRANSMITTED REPORTS TO THE ORDER AUDIT TRAIL SYSTEM (OATS)THAT CONTAINED INACCURATE, INCOMPLETE OR IMPROPERLYFORMATTED. THE FIRM FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO ITS CUSTOMERS ITS CORRECT CAPACITY INTRANSACTIONS; FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO CUSTOMERS THAT TRANSACTIONS WERE EXECUTED ATAN AVERAGE PRICE; FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO ITS CUSTOMERS ITS CORRECT CAPACITY IN THETRANSACTIONS, THAT THE TRANSACTIONS WERE EXECUTED AT ANAVERAGE PRICE AND THAT IT WAS A MARKET MAKER IN EACH SUCHSECURITY; FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TOITS CUSTOMERS ITS CORRECT CAPACITY IN TRANSACTIONS AND THECORRECT FORM OF REMUNERATION; FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING ALL THE CAPACITIES IN WHICH IT EXECUTEDMULTIPLE-CAPACITY TRANSACTIONS; FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING THE CORRECT FORM OF REMUNERATION;AND, ON ONE OCCASION, FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO A CUSTOMER THAT IT WAS A MARKET MAKER IN THESECURITY. THE FIRM FAILED TO CORRECTLY MARK ITS TRADING LEDGERAS "LONG" OR "SHORT"; FAILED TO SHOW THE TERMS AND CONDITIONSON BROKERAGE ORDER MEMORANDA; AND FAILED TO PRESERVE FOR APERIOD OF NOT LESS THAN THREE YEARS, THE FIRST TWO IN ANACCESSIBLE PLACE, ONE BROKERAGE ORDER MEMORANDA. THE FIRMFAILED TO REPORT TO THE FINRA/ NASDAQ TRADE REPORTING FACILITY(FNTRF): THE CORRECT CAPACITY IN WHICH IT EXECUTEDTRANSACTIONS IN REPORTABLE SECURITIES; THE CORRECT EXECUTIONTIME FOR TRANSACTIONS IN REPORTABLE SECURITIES; AND FAILED TOCORRECTLY REPORT RISKLESS PRINCIPAL TRADES, THRICE BY MEDIA-REPORTING THE CUSTOMER LEG AS PRINCIPAL AND ONCE BY FAILING TOSIMPLY SUBMIT A RISKLESS PRINCIPAL CLEARING ENTRY AS REQUIRED.THE FIRM INCORRECTLY DESIGNED AS".PRP" TO THE FNTRF LAST SALEREPORTS OF TRANSACTIONS IN DESIGNATED SECURITIES. [CONTINUEDIN COMMENTS]


Resolution:



No










Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $70,000 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING ORDERHANDLING AND EXECUTION; BEST EXECUTION; TRADE REPORTING; SALETRANSACTIONS; BOOKS AND RECORDS; AND TRADING HALTS WITHIN 30BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC.

Regulator Statement THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND/OR NASD RULES ADDRESSINGQUALITY OF MARKET TOPICS.THE FIRM'S WRITTEN SUPERVISORYPROCEDURES FAILED TO PROVIDE FOR MINIMAL REQUIREMENT FORADEQUATE WRITTEN SUPERVISORY PROCEDURES FOR ORDERHANDLING AND EXECUTION; BEST EXECUTION; TRADE REPORTING; SALETRANSACTIONS; BOOKS AND RECORDS. THE FIRM FAILED TO PROVIDESUFFICIENT DOCUMENTARY EVIDENCE THAT IT PERFORMED THESUPERVISORY REVIEWS SET FORTH IN ITS WRITTEN SUPERVISORYPROCEDURES CONCERNING TRADING HALTS.









Initiated By: FINRA

SEC RULES 10B-10, 17A-3, 17A-4, NASD RULES 2110, 3010, 3110,4632(A)(5)(G), 6130, 6955(A) - JEFFERIES & COMPANY, INC. FAILED TOREPORT TO THE NASD/NASDAQ TRADE REPORTING FACILITY (FNTRF):THE CORRECT SYMBOL INDICATING WHETHER TRANSACTIONS WEREBUY, SELL, SELL SHORT OR CROSS FOR TRANSACTIONS IN REPORTABLESECURITIES; FAILED TO REPORT THE CORRECT .PRP TIME FOR ONETRANSACTION IN A REPORTABLE SECURITY; FAILED TO REPORT THECORRECT CAPACITY FOR AGENCY CROSS TRANSACTIONS; FAILED TOREPORT ONE LAST SALE REPORT OF A TRANSACTION IN A DESIGNATEDSECURITY; FAILED TO REPORT THE CANCELLATION OF TRADESPREVIOUSLY SUBMITTED; FAILED TO SUBMIT FOR THE OFFSETTING, "RISKLESS" PORTION OF RISKLESS PRINCIPAL TRANSACTIONS INDESIGNATED SECURITIES, EITHER A CLEARING-ONLY REPORT WITH ACAPACITY INDICATOR OF "RISKLESS PRINCIPAL," OR A NON-TAPE, NON-CLEARING REPORT WITH A CAPACITY INDICATOR OF "RISKLESSPRINCIPAL;" INCORRECTLY SUBMITTED FOR THE OFFSETTING, RISKLESSPORTION OF ONE RISKLESS PRINCIPAL TRANSACTION IN A DESIGNATEDSECURITY, A TAPE OR "MEDIA" REPORT WITH A CAPACITY INDICATOR OF "PRINCIPAL;" INCORRECTLY REPORTED IN AN AGENCY CAPACITY THEPRINCIPAL LEG OF RISKLESS PRINCIPAL TRANSACTIONS; AND FAILED TOREPORT THE CORRECT CAPACITY FOR PRINCIPAL TRANSACTIONS. THEFIRM INACCURATELY REPORTED TO THE OTC REPORTING FACILITY(OTCRF) THE CAPACITY FOR THE STREET LEG OF RISKLESS PRINCIPALTRANSACTIONS; INACCURATELY REPORTED TO THE OTCRF THECAPACITY FOR THE STREET LEG OF RISKLESS PRINCIPAL TRANSACTIONSWHILE ALSO INACCURATELY MEDIA-REPORTING THE CUSTOMER LEG OFTHE SAME RISKLESS PRINCIPAL TRANSACTIONS; INACCURATELY MEDIA-REPORTED TO THE OTCRF THE CUSTOMER LEG OF ONE RISKLESSPRINCIPAL TRANSACTION; FAILED TO REPORT THE CORRECT CAPACITYFOR ONE PRINCIPAL TRANSACTION; DOUBLE MEDIA-REPORTEDSEPARATE TRANSACTIONS; AND FAILED TO REPORT THE CORRECTCAPACITY FOR ONE RISKLESS PRINCIPAL TRANSACTION. THE FIRMTRANSMITTED REPORTS TO THE ORDER AUDIT TRAIL SYSTEM (OATS)THAT CONTAINED INACCURATE, INCOMPLETE OR IMPROPERLYFORMATTED. THE FIRM FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO ITS CUSTOMERS ITS CORRECT CAPACITY INTRANSACTIONS; FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO CUSTOMERS THAT TRANSACTIONS WERE EXECUTED ATAN AVERAGE PRICE; FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO ITS CUSTOMERS ITS CORRECT CAPACITY IN THETRANSACTIONS, THAT THE TRANSACTIONS WERE EXECUTED AT ANAVERAGE PRICE AND THAT IT WAS A MARKET MAKER IN EACH SUCHSECURITY; FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TOITS CUSTOMERS ITS CORRECT CAPACITY IN TRANSACTIONS AND THECORRECT FORM OF REMUNERATION; FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING ALL THE CAPACITIES IN WHICH IT EXECUTEDMULTIPLE-CAPACITY TRANSACTIONS; FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING THE CORRECT FORM OF REMUNERATION;AND, ON ONE OCCASION, FAILED TO PROVIDE WRITTEN NOTIFICATIONDISCLOSING TO A CUSTOMER THAT IT WAS A MARKET MAKER IN THESECURITY. THE FIRM FAILED TO CORRECTLY MARK ITS TRADING LEDGERAS "LONG" OR "SHORT"; FAILED TO SHOW THE TERMS AND CONDITIONSON BROKERAGE ORDER MEMORANDA; AND FAILED TO PRESERVE FOR APERIOD OF NOT LESS THAN THREE YEARS, THE FIRST TWO IN ANACCESSIBLE PLACE, ONE BROKERAGE ORDER MEMORANDA. THE FIRMFAILED TO REPORT TO THE FINRA/ NASDAQ TRADE REPORTING FACILITY(FNTRF): THE CORRECT CAPACITY IN WHICH IT EXECUTEDTRANSACTIONS IN REPORTABLE SECURITIES; THE CORRECT EXECUTIONTIME FOR TRANSACTIONS IN REPORTABLE SECURITIES; AND FAILED TOCORRECTLY REPORT RISKLESS PRINCIPAL TRADES, THRICE BY MEDIA-REPORTING THE CUSTOMER LEG AS PRINCIPAL AND ONCE BY FAILING TOSIMPLY SUBMIT A RISKLESS PRINCIPAL CLEARING ENTRY AS REQUIRED.THE FIRM INCORRECTLY DESIGNED AS".PRP" TO THE FNTRF LAST SALEREPORTS OF TRANSACTIONS IN DESIGNATED SECURITIES. [CONTINUEDIN COMMENTS]






Initiated By: FINRA


Censure





Other Product Type(s): REPORTABLE SECURITIES, DESIGNATED SECURITIES


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $70,000 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING ORDERHANDLING AND EXECUTION; BEST EXECUTION; TRADE REPORTING; SALETRANSACTIONS; BOOKS AND RECORDS; AND TRADING HALTS WITHIN 30BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC.

Firm Statement THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND/OR NASD RULES ADDRESSINGQUALITY OF MARKET TOPICS.THE FIRM'S WRITTEN SUPERVISORYPROCEDURES FAILED TO PROVIDE FOR MINIMAL REQUIREMENT FORADEQUATE WRITTEN SUPERVISORY PROCEDURES FOR ORDERHANDLING AND EXECUTION; BEST EXECUTION; TRADE REPORTING; SALETRANSACTIONS; BOOKS AND RECORDS. THE FIRM FAILED TO PROVIDESUFFICIENT DOCUMENTARY EVIDENCE THAT IT PERFORMED THESUPERVISORY REVIEWS SET FORTH IN ITS WRITTEN SUPERVISORYPROCEDURES CONCERNING TRADING HALTS.



Disclosure 52 of 85

i


Allegations: NASD RULES 2110, 3010 - JEFFERIES & COMPANY, INC.'S WRITTENSUPERVISORY PROCEDURES IDENTIFIED A TRADING MANAGER WITHOVERALL RESPONSIBILITY FOR PROPRIETARY TRADING OF SECURITIESON THE OTC BULLETIN BOARD (OTCBB)AND THE PINK SHEETS AND WASRESPONSIBLE FOR ENSURING THAT FIRM TRADERS HONORED THEIRPOSTED QUOTATIONS. THE FIRM'S PROCEDURES STATED THAT THETRADING MANAGER SHOULD REVIEW EXECUTIONS TO ENSURE THATTRANSACTIONS WERE NOT EFFECTED TO MARK THE CLOSE. THETRADING MANAGER WAS NOT PERFORMING THESE RESPONSIBILITIESNOR HAD THE MANAGER EFFECTIVELY DELEGATED THE SUPERVISORYRESPONSIBILITIES TO ANY OTHER FIRM PRINCIPAL. THE FIRM FAILED TOESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES BECAUSE NO REGISTERED PRINCIPALWAS CARRYING OUT THE SUPERVISORY RESPONSIBILITIES CONCERNINGQUOTATION AND TRADING ACTIVITY AT OR NEAR THE CLOSE OF THETRADING DAY ON THE OTCBB AND PINK SHEET DESK.








Initiated By: FINRA









Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $25,000 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES CONCERNINGQUOTATION AND TRADING ACTIVITY AT OR NEAR THE CLOSE OF THETRADING DAY WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWCBY THE NAC.


No











Initiated By: FINRA










Resolution:












Disclosure 53 of 85

i


Allegations: SEC RULES 10B-10(A)(4), 17A-3, 17A-4, NASD RULES 2110, 3010, 3110,6230(C) - JEFFERIES & COMPANY, INC. BOUGHT AND LATER SOLD ADISTRESSED CORPORATE DEBT SECURITY FOR ITS OWN ACCOUNT FROMA CUSTOMER AND FAILED TO SELL THE SECURITY TO ANOTHERCUSTOMER AT A PRICE THAT WAS FAIR, TAKING INTO CONSIDERATION ALLRELEVANT CIRCUMSTANCES, INCLUDING MARKET CONDITIONS AT THETIME OF THE TRANSACTION, THE EXPENSE INVOLVED AND THAT THE FIRMWAS ENTITLED TO A PROFIT. IN ITS FIXED-INCOME AREA, THE FIRM FAILEDIN MANY INSTANCES TO CREATE AND MAINTAIN MEMORANDA OFBROKERAGE ORDERS FOR ORDERS THAT DID NOT RESULT IN ANEXECUTION; FAILED TO REFLECT THE ACCURATE ORDER ENTRY TIMEAND/OR ORDER EXECUTION TIME ON BROKERAGE ORDER MEMORANDA;FAILED TO REFLECT ANY ORDER ENTRY TIME AND/OR ORDER EXECUTIONTIME ON BROKERAGE ORDER MEMORANDA; AND FAILED TO CREATE ANDMAINTAIN ANY MEMORANDA FOR SOME BROKERAGE ORDERS. THE FIRMFAILED IN MANY INSTANCES TO PROVIDE CUSTOMERS EITHER AT ORBEFORE THE COMPLETION OF A TRANSACTION IN A DEBT SECURITYSUBJECT TO REDEMPTION BEFORE MATURITY, A STATEMENT TO THEEFFECT THAT SUCH DEBT SECURITY MAY BE REDEEMED IN WHOLE OR INPART BEFORE MATURITY, THAT SUCH A REDEMPTION COULD AFFECT THEYIELD REPRESENTED AND THE FACT THAT ADDITIONAL INFORMATIONWAS AVAILABLE UPON REQUEST. THE FIRM FAILED TO REPORT TO THETRADE REPORTING AND COMPLIANCE ENGINE (TRACE) THE CORRECTEXECUTION TIME FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES;THE CORRECT NUMBER OF BONDS FOR ONE TRANSACTION IN A TRACE-ELIGIBLE SECURITY; AND REPORTED TO TRACE A TRANSACTION IN ATRACE-ELIGIBLE SECURITY WITH A SPECIAL PRICE MODIFIER NOTAPPLICABLE TO THE TRANSACTION. THE FIRM'S SUPERVISORY SYSTEMFOR ITS HIGH-YIELD AND DISTRESSED-BOND DESK DID NOT PROVIDEFOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH APPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULESCONCERNING RECORDKEEPING, TRADE CONFIRMATIONS TOCUSTOMERS, FAIR PRICING AND FINRA'S MARKUP POLICY. [CONTINUED INCOMMENTS]







Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE SECURITIES; DEBT SECURITIES

SEC RULES 10B-10(A)(4), 17A-3, 17A-4, NASD RULES 2110, 3010, 3110,6230(C) - JEFFERIES & COMPANY, INC. BOUGHT AND LATER SOLD ADISTRESSED CORPORATE DEBT SECURITY FOR ITS OWN ACCOUNT FROMA CUSTOMER AND FAILED TO SELL THE SECURITY TO ANOTHERCUSTOMER AT A PRICE THAT WAS FAIR, TAKING INTO CONSIDERATION ALLRELEVANT CIRCUMSTANCES, INCLUDING MARKET CONDITIONS AT THETIME OF THE TRANSACTION, THE EXPENSE INVOLVED AND THAT THE FIRMWAS ENTITLED TO A PROFIT. IN ITS FIXED-INCOME AREA, THE FIRM FAILEDIN MANY INSTANCES TO CREATE AND MAINTAIN MEMORANDA OFBROKERAGE ORDERS FOR ORDERS THAT DID NOT RESULT IN ANEXECUTION; FAILED TO REFLECT THE ACCURATE ORDER ENTRY TIMEAND/OR ORDER EXECUTION TIME ON BROKERAGE ORDER MEMORANDA;FAILED TO REFLECT ANY ORDER ENTRY TIME AND/OR ORDER EXECUTIONTIME ON BROKERAGE ORDER MEMORANDA; AND FAILED TO CREATE ANDMAINTAIN ANY MEMORANDA FOR SOME BROKERAGE ORDERS. THE FIRMFAILED IN MANY INSTANCES TO PROVIDE CUSTOMERS EITHER AT ORBEFORE THE COMPLETION OF A TRANSACTION IN A DEBT SECURITYSUBJECT TO REDEMPTION BEFORE MATURITY, A STATEMENT TO THEEFFECT THAT SUCH DEBT SECURITY MAY BE REDEEMED IN WHOLE OR INPART BEFORE MATURITY, THAT SUCH A REDEMPTION COULD AFFECT THEYIELD REPRESENTED AND THE FACT THAT ADDITIONAL INFORMATIONWAS AVAILABLE UPON REQUEST. THE FIRM FAILED TO REPORT TO THETRADE REPORTING AND COMPLIANCE ENGINE (TRACE) THE CORRECTEXECUTION TIME FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES;THE CORRECT NUMBER OF BONDS FOR ONE TRANSACTION IN A TRACE-ELIGIBLE SECURITY; AND REPORTED TO TRACE A TRANSACTION IN ATRACE-ELIGIBLE SECURITY WITH A SPECIAL PRICE MODIFIER NOTAPPLICABLE TO THE TRANSACTION. THE FIRM'S SUPERVISORY SYSTEMFOR ITS HIGH-YIELD AND DISTRESSED-BOND DESK DID NOT PROVIDEFOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH APPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULESCONCERNING RECORDKEEPING, TRADE CONFIRMATIONS TOCUSTOMERS, FAIR PRICING AND FINRA'S MARKUP POLICY. [CONTINUED INCOMMENTS]


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $500,000, ORDERED TO PAY$450,511.66, PLUS INTEREST, IN RESTITUTION TO A PUBLIC CUSTOMERAND REQUIRED TO REVISE ITS SUPERVISORY PROCEDURES REGARDINGRECORDKEEPING, TRADE CONFIRMATIONS TO CUSTOMERS, FAIRPRICING AND FINRA'S MARKUP POLICY WITHIN 30 BUSINESS DAYS OFACCEPTANCE OF THIS AWC BY THE NAC. ANY UNDISTRIBUTEDRESTITUTION AND INTEREST SHALL BE FORWARDED TO THEAPPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE(S) IN WHICH THE CUSTOMER LASTRESIDED. SATISFACTORY PROOF OF PAYMENT OF RESTITUTION OR OFREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION SHALL BE PROVIDED TO FINRA NO LATER THAN 45 DAYSAFTER ACCEPTANCE OF THIS AWC.


No









WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $500,000, ORDERED TO PAY$450,511.66, PLUS INTEREST, IN RESTITUTION TO A PUBLIC CUSTOMERAND REQUIRED TO REVISE ITS SUPERVISORY PROCEDURES REGARDINGRECORDKEEPING, TRADE CONFIRMATIONS TO CUSTOMERS, FAIRPRICING AND FINRA'S MARKUP POLICY WITHIN 30 BUSINESS DAYS OFACCEPTANCE OF THIS AWC BY THE NAC. ANY UNDISTRIBUTEDRESTITUTION AND INTEREST SHALL BE FORWARDED TO THEAPPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE(S) IN WHICH THE CUSTOMER LASTRESIDED. SATISFACTORY PROOF OF PAYMENT OF RESTITUTION OR OFREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION SHALL BE PROVIDED TO FINRA NO LATER THAN 45 DAYSAFTER ACCEPTANCE OF THIS AWC.

Regulator Statement IN CERTAIN INSTANCES, THE FIRM COULD NOT PRODUCE ANYDOCUMENTATION INDICATING THAT ANY SUPERVISORY REVIEW RELATINGTO FAIR PRICING AND FINRA'S MARKUP POLICY HAD BEEN CONDUCTED.


Allegations: SEC RULES 10B-10(A)(4), 17A-3, 17A-4, NASD RULES 2110, 3010, 3110,6230(C) - JEFFERIES & COMPANY, INC. BOUGHT A DISTRESSEDCORPORATE DEBT SECURITY FOR ITS OWN ACCOUNT FROM A CUSTOMERAND FAILED TO SELL THE SECURITY TO ANOTHER CUSTOMER AT A PRICETHAT WAS FAIR, TAKING INTO CONSIDERATION ALL RELEVANTCIRCUMSTANCES, INCLUDING MARKET CONDITIONS AT THE TIME OF THETRANSACTION, THE EXPENSE INVOLVED AND THAT THE FIRM WASENTITLED TO A PROFIT. IN ITS FIXED-INCOME AREA, THE FIRM FAILED INMANY INSTANCES TO CREATE AND MAINTAIN MEMORANDA OFBROKERAGE ORDERS FOR ORDERS THAT DID NOT RESULT IN ANEXECUTION; FAILED TO REFLECT THE ACCURATE ORDER ENTRY TIMEAND/OR ORDER EXECUTION TIME ON BROKERAGE ORDER MEMORANDA;FAILED TO REFLECT ANY ORDER ENTRY TIME AND/OR ORDER EXECUTIONTIME ON BROKERAGE ORDER MEMORANDA; AND FAILED TO CREATE ANDMAINTAIN ANY MEMORANDA FOR SOME BROKERAGE ORDERS. THE FIRMFAILED IN MANY INSTANCES TO PROVIDE CUSTOMERS EITHER AT ORBEFORE THE COMPLETION OF A TRANSACTION IN A DEBT SECURITYSUBJECT TO REDEMPTION BEFORE MATURITY, A STATEMENT TO THEEFFECT THAT SUCH DEBT SECURITY MAY BE REDEEMED IN WHOLE OR INPART BEFORE MATURITY, THAT SUCH A REDEMPTION COULD AFFECT THEYIELD REPRESENTED AND THE FACT THAT ADDITIONAL INFORMATIONWAS AVAILABLE UPON REQUEST. THE FIRM FAILED TO REPORT TO THETRADE REPORTING AND COMPLIANCE ENGINE (TRACE) THE CORRECTEXECUTION TIME FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES;THE CORRECT NUMBER OF BONDS FOR ONE TRANSACTION IN A TRACE-ELIGIBLE SECURITY; AND REPORTED TO TRACE A TRANSACTION IN ATRACE-ELIGIBLE SECURITY WITH A SPECIAL PRICE MODIFIER NOTAPPLICABLE TO THE TRANSACTION. THE FIRM'S SUPERVISORY SYSTEMFOR ITS HIGH-YIELD AND DISTRESSED-BOND DESK DID NOT PROVIDEFOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH APPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULESCONCERNING RECORDKEEPING, TRADE CONFIRMATIONS TOCUSTOMERS, FAIR PRICING AND FINRA'S MARKUP POLICY.







Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE SECURITIES; DEBT SECURITIES

SEC RULES 10B-10(A)(4), 17A-3, 17A-4, NASD RULES 2110, 3010, 3110,6230(C) - JEFFERIES & COMPANY, INC. BOUGHT A DISTRESSEDCORPORATE DEBT SECURITY FOR ITS OWN ACCOUNT FROM A CUSTOMERAND FAILED TO SELL THE SECURITY TO ANOTHER CUSTOMER AT A PRICETHAT WAS FAIR, TAKING INTO CONSIDERATION ALL RELEVANTCIRCUMSTANCES, INCLUDING MARKET CONDITIONS AT THE TIME OF THETRANSACTION, THE EXPENSE INVOLVED AND THAT THE FIRM WASENTITLED TO A PROFIT. IN ITS FIXED-INCOME AREA, THE FIRM FAILED INMANY INSTANCES TO CREATE AND MAINTAIN MEMORANDA OFBROKERAGE ORDERS FOR ORDERS THAT DID NOT RESULT IN ANEXECUTION; FAILED TO REFLECT THE ACCURATE ORDER ENTRY TIMEAND/OR ORDER EXECUTION TIME ON BROKERAGE ORDER MEMORANDA;FAILED TO REFLECT ANY ORDER ENTRY TIME AND/OR ORDER EXECUTIONTIME ON BROKERAGE ORDER MEMORANDA; AND FAILED TO CREATE ANDMAINTAIN ANY MEMORANDA FOR SOME BROKERAGE ORDERS. THE FIRMFAILED IN MANY INSTANCES TO PROVIDE CUSTOMERS EITHER AT ORBEFORE THE COMPLETION OF A TRANSACTION IN A DEBT SECURITYSUBJECT TO REDEMPTION BEFORE MATURITY, A STATEMENT TO THEEFFECT THAT SUCH DEBT SECURITY MAY BE REDEEMED IN WHOLE OR INPART BEFORE MATURITY, THAT SUCH A REDEMPTION COULD AFFECT THEYIELD REPRESENTED AND THE FACT THAT ADDITIONAL INFORMATIONWAS AVAILABLE UPON REQUEST. THE FIRM FAILED TO REPORT TO THETRADE REPORTING AND COMPLIANCE ENGINE (TRACE) THE CORRECTEXECUTION TIME FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES;THE CORRECT NUMBER OF BONDS FOR ONE TRANSACTION IN A TRACE-ELIGIBLE SECURITY; AND REPORTED TO TRACE A TRANSACTION IN ATRACE-ELIGIBLE SECURITY WITH A SPECIAL PRICE MODIFIER NOTAPPLICABLE TO THE TRANSACTION. THE FIRM'S SUPERVISORY SYSTEMFOR ITS HIGH-YIELD AND DISTRESSED-BOND DESK DID NOT PROVIDEFOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH APPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULESCONCERNING RECORDKEEPING, TRADE CONFIRMATIONS TOCUSTOMERS, FAIR PRICING AND FINRA'S MARKUP POLICY.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $500,000, ORDERED TO PAY$450,511.66, PLUS INTEREST, IN RESTITUTION TO A PUBLIC CUSTOMERAND REQUIRED TO REVISE ITS SUPERVISORY PROCEDURES REGARDINGRECORDKEEPING, TRADE CONFIRMATIONS TO CUSTOMERS, FAIRPRICING AND FINRA'S MARKUP POLICY WITHIN 30 BUSINESS DAYS OFACCEPTANCE OF THIS AWC BY THE NAC.



Disclosure 54 of 85

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Allegations: NASD RULES 2110, 3010, 3310 - JEFFERIES & COMPANY'S AGGREGATETRADE VOLUME (BUY AND SELL) FOR AN EQUITY SECURITY ADVERTISEDIN PRIVATE SERVICE PROVIDERS FOR ONE MONTH SUBSTANTIALLYEXCEEDED THE FIRM'S EXECUTED TRADE VOLUME FOR THE SAMESECURITY. THE FIRM FAILED TO DETERMINE WHETHER THE TRADEVOLUME THAT IT ADVERTISED IN THESE SERVICES ACCURATELYREFLECTED ITS EXECUTED TRADE VOLUME. THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES CONCERNING NASD RULE 3310 - THEIDENTIFICATION OF THE PERSON(S) RESPONSIBLE FOR SUPERVISIONWITH RESPECT TO THE ADVERTISED TRADE VOLUME ON SUBSCRIBERSERVICES AND APPLICABLE RULES. THE FIRM DID NOT SUPERVISE THETRADE VOLUME THAT IT ADVERTISED IN THESE SYSTEMS.







Initiated By: FINRA







NASD RULES 2110, 3010, 3310 - JEFFERIES & COMPANY'S AGGREGATETRADE VOLUME (BUY AND SELL) FOR AN EQUITY SECURITY ADVERTISEDIN PRIVATE SERVICE PROVIDERS FOR ONE MONTH SUBSTANTIALLYEXCEEDED THE FIRM'S EXECUTED TRADE VOLUME FOR THE SAMESECURITY. THE FIRM FAILED TO DETERMINE WHETHER THE TRADEVOLUME THAT IT ADVERTISED IN THESE SERVICES ACCURATELYREFLECTED ITS EXECUTED TRADE VOLUME. THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES CONCERNING NASD RULE 3310 - THEIDENTIFICATION OF THE PERSON(S) RESPONSIBLE FOR SUPERVISIONWITH RESPECT TO THE ADVERTISED TRADE VOLUME ON SUBSCRIBERSERVICES AND APPLICABLE RULES. THE FIRM DID NOT SUPERVISE THETRADE VOLUME THAT IT ADVERTISED IN THESE SYSTEMS.


Resolution:




No




Allegations: NASD RULES 2110, 3010, 3310 - JEFFERIES & COMPANY'S AGGREGATETRADE VOLUME (BUY AND SELL) FOR AN EQUITY SECURITY ADVERTISEDIN PRIVATE SERVICE PROVIDERS FOR ONE MONTH SUBSTANTIALLYEXCEEDED THE FIRM'S EXECUTED TRADE VOLUME FOR THE SAMESECURITY. THE FIRM FAILED TO DETERMINE WHETHER THE TRADEVOLUME THAT IT ADVERTISED IN THESE SERVICES ACCURATELYREFLECTED ITS EXECUTED TRADE VOLUME. THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES CONCERNING NASD RULE 3310 - THEIDENTIFICATION OF THE PERSON(S) RESPONSIBLE FOR SUPERVISIONWITH RESPECT TO THE ADVERTISED TRADE VOLUME ON SUBSCRIBERSERVICES AND APPLICABLE RULES. THE FIRM DID NOT SUPERVISE THETRADE VOLUME THAT IT ADVERTISED IN THESE SYSTEMS.








Initiated By: FINRA


Censure


$50,000.00 FINE.





NASD RULES 2110, 3010, 3310 - JEFFERIES & COMPANY'S AGGREGATETRADE VOLUME (BUY AND SELL) FOR AN EQUITY SECURITY ADVERTISEDIN PRIVATE SERVICE PROVIDERS FOR ONE MONTH SUBSTANTIALLYEXCEEDED THE FIRM'S EXECUTED TRADE VOLUME FOR THE SAMESECURITY. THE FIRM FAILED TO DETERMINE WHETHER THE TRADEVOLUME THAT IT ADVERTISED IN THESE SERVICES ACCURATELYREFLECTED ITS EXECUTED TRADE VOLUME. THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES CONCERNING NASD RULE 3310 - THEIDENTIFICATION OF THE PERSON(S) RESPONSIBLE FOR SUPERVISIONWITH RESPECT TO THE ADVERTISED TRADE VOLUME ON SUBSCRIBERSERVICES AND APPLICABLE RULES. THE FIRM DID NOT SUPERVISE THETRADE VOLUME THAT IT ADVERTISED IN THESE SYSTEMS.


Resolution:





Disclosure 55 of 85

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Allegations: SEC RULES 10B-10, 200(G), 203(B), 605 (FORMERLY 11AC1-5), NASD RULES2110, 3010, 3350, 3370, 4632, 4642, 6130, 6230, 6420, 6620, 6640 (FORMERLY6740), AND 6955 - RESPONDENT MEMBER FAILED TO SUBMIT TO OATSREPORTABLE ORDER EVENTS (ROES) FOR "NOT HELD" ORDERS;SUBMITTED EXECUTION AND ROUTE OR COMBINED/ORDER ROUTEREPORTS THAT FAILED TO LINK TO, RESPECTIVELY, RELATED TRADEREPORTS IN THE AUTOMATED CONFIRMATION TRANSACTION SERVICE(ACT) AND RELATED ORDERS IN SUPERMONTAGE; REPORTED ROUTE ORCOMBINED/ORDER ROUTE REPORTS THAT FAILED TO MATCH THERECEIVING FIRM'S NEW ORDER REPORT AND VICE VERSA; FAILED TOSUBMIT TO OATS ACCURATE ORDER INFORMATION AND REQUIREDORDER EXECUTION REPORTS; INCORRECTLY SUBMITTED TO OATSEXECUTION REPORTS FOR TRANSACTIONS EXECUTED AWAY FROM THEFIRM AND FAILED TO PROPERLY UTILIZE THE COMBINED ORDEREXECUTION, ROUTE AND COMBINED ORDER/ROUTE REPORTS. THEFINDINGS STATED THAT THE FIRM FAILED TO DISCLOSE CERTAINREQUIRED INFORMATION ON A CUSTOMER CONFIRMATION AND FAILED TOEXCLUDE ORDERS SUBMITTED ON A "NOT HELD" BASIS IN THECALCULATION OF THE FIRM'S EXECUTION QUALITY STATISTICS. THEFINDINGS ALSO STATED THAT THE FIRM SUBMITTED A QUOTATION FORPUBLICATION ON A QUOTATION MEDIUM, THE PINK SHEETS, WITHOUTHAVING IN ITS RECORDS THE DOCUMENTS AND INFORMATION REQUIREDBY SEC RULE 15C2-11(A) AND (B), HAVING A REASONABLE BASIS UNDERTHE CIRCUMSTANCES FOR BELIEVING THE INFORMATION REQUIRED BYRULE 15C2-11(A) WAS ACCURATE IN ALL MATERIAL RESPECTS AND THATSOURCES OF THE INFORMATION WERE RELIABLE OR SUBMITTING A FORM211 TO NASD. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TOREPORT TO TRACE THE CORRECT CONTRA-PARTY AND FAILED TOREPORT TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES TO TRACEWITHIN 15 MINUTES AFTER EXECUTION. ALLEGATIONS CONTINUED INCOMMENTS.







Initiated By: NASD







SEC RULES 10B-10, 200(G), 203(B), 605 (FORMERLY 11AC1-5), NASD RULES2110, 3010, 3350, 3370, 4632, 4642, 6130, 6230, 6420, 6620, 6640 (FORMERLY6740), AND 6955 - RESPONDENT MEMBER FAILED TO SUBMIT TO OATSREPORTABLE ORDER EVENTS (ROES) FOR "NOT HELD" ORDERS;SUBMITTED EXECUTION AND ROUTE OR COMBINED/ORDER ROUTEREPORTS THAT FAILED TO LINK TO, RESPECTIVELY, RELATED TRADEREPORTS IN THE AUTOMATED CONFIRMATION TRANSACTION SERVICE(ACT) AND RELATED ORDERS IN SUPERMONTAGE; REPORTED ROUTE ORCOMBINED/ORDER ROUTE REPORTS THAT FAILED TO MATCH THERECEIVING FIRM'S NEW ORDER REPORT AND VICE VERSA; FAILED TOSUBMIT TO OATS ACCURATE ORDER INFORMATION AND REQUIREDORDER EXECUTION REPORTS; INCORRECTLY SUBMITTED TO OATSEXECUTION REPORTS FOR TRANSACTIONS EXECUTED AWAY FROM THEFIRM AND FAILED TO PROPERLY UTILIZE THE COMBINED ORDEREXECUTION, ROUTE AND COMBINED ORDER/ROUTE REPORTS. THEFINDINGS STATED THAT THE FIRM FAILED TO DISCLOSE CERTAINREQUIRED INFORMATION ON A CUSTOMER CONFIRMATION AND FAILED TOEXCLUDE ORDERS SUBMITTED ON A "NOT HELD" BASIS IN THECALCULATION OF THE FIRM'S EXECUTION QUALITY STATISTICS. THEFINDINGS ALSO STATED THAT THE FIRM SUBMITTED A QUOTATION FORPUBLICATION ON A QUOTATION MEDIUM, THE PINK SHEETS, WITHOUTHAVING IN ITS RECORDS THE DOCUMENTS AND INFORMATION REQUIREDBY SEC RULE 15C2-11(A) AND (B), HAVING A REASONABLE BASIS UNDERTHE CIRCUMSTANCES FOR BELIEVING THE INFORMATION REQUIRED BYRULE 15C2-11(A) WAS ACCURATE IN ALL MATERIAL RESPECTS AND THATSOURCES OF THE INFORMATION WERE RELIABLE OR SUBMITTING A FORM211 TO NASD. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TOREPORT TO TRACE THE CORRECT CONTRA-PARTY AND FAILED TOREPORT TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES TO TRACEWITHIN 15 MINUTES AFTER EXECUTION. ALLEGATIONS CONTINUED INCOMMENTS.


Resolution:


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES & COMPANY,INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM WAS CENSURED, FINED $525,000 ANDREQUIRED TO REVISE THE FIRM'S WRITTEN SUPERVISORY PROCEDURESWITH RESPECT TO SEC RULES 15C2-11, 203(A) (LONG SALES) AND203(B)(3) (THRESHOLD SECURITIES), NASD RULE 6740 (CURRENTLY RULE6640), TRACE; ORDER HANDLING AND EXECUTION, BEST EXECUTION,TRADE REPORTING, SALES TRANSACTIONS, REGISTRATION; ANTI-INTIMIDATION/COORDINATION; SOFT DOLLARS, ORDER AUDIT TRAILSYSTEM (OATS), OTHER TRADING RULES (BOOKS AND RECORDS) ANDNASD RULES 3110(B)(1) (MARKING TICKETS), 3350 (BID TEST), 3370(PROMPT RECEIPT AND DELIVERY OF SECURITIES) AND 6130(D)(6) (TRADEREPORT INPUT).

Regulator Statement ALLEGATIONS CONTINUED: NASD FOUND THAT THE FIRM SUBMITTEDDUPLICATE TRADE REPORTS TO ACT FOR TRANSACTIONS IN NASDAQNATIONAL MARKET (NNM) SECURITIES; FAILED TO REPORT THE CORRECTCAPACITY TO ACT; FAILED TO CORRECTLY REPORT TRANSACTIONS AS "LONG" OR "SHORT"; FAILED TO CORRECTLY REPORT "RISKLESS"PRINCIPAL TRANSACTIONS IN NNM, NASDAQ SMALLCAP, CONSOLIDATEDQUOTATION SYSTEM (CQS) AND OTC BULLETIN BOARD SECURITIES ANDFAILED TO PROPERLY UTILIZE THE ".PRP" MODIFIER IN TRANSACTIONSINVOLVING NNM SECURITIES. NASD ALSO FOUND THAT THE FIRM FAILEDTO ACCURATELY MARK SALES ON THE FIRM'S TRADING LEDGER AS "LONG" OR "SHORT"; EXECUTED CUSTOMER SHORT SALES ANDPROPRIETARY SHORT SALES IN SECURITIES IN WHICH THE FIRM WAS NOTA BONA FIDE MARKET MAKER AND FAILED TO MAKE THE REQUIRED "AFFIRMATIVE DETERMINATION"; EXECUTED CUSTOMER SHORT SALETRANSACTIONS IN CERTAIN NNM SECURITIES AT OR BELOW THECURRENT INSIDE BID WHEN THE CURRENT INSIDE BID WAS BELOW THEPRECEDING INSIDE BID IN THE SECURITY AND EXECUTED PROPRIETARYSHORT SALE ORDERS IN A SECURITY IN WHICH THE FIRM WAS NOT ABONA FIDE MARKET MAKER AND FAILED TO FULFILL THE ESTABLISHEDLOCATE REQUIREMENT". IN ADDITION, NASD FOUND THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULESCONCERNING SEC RULES 15C2-11, 203(A) (LONG SALES) AND 203(B)(3)(THRESHOLD SECURITIES), NASD RULE 6740 (CURRENTLY RULE 6640),TRACE; ORDER HANDLING AND EXECUTION, BEST EXECUTION, TRADEREPORTING, SALES TRANSACTIONS, REGISTRATION; ANTI-INTIMIDATION/COORDINATION; SOFT DOLLARS, ORDER AUDIT TRAILSYSTEM (OATS), OTHER TRADING RULES (BOOKS AND RECORDS) ANDNASD RULES 3110(B)(1) (MARKING TICKETS), 3350 (BID TEST), 3370(PROMPT RECEIPT AND DELIVERY OF SECURITIES) AND 6130(D)(6) (TRADEREPORT INPUT).


No







ALLEGATIONS CONTINUED: NASD FOUND THAT THE FIRM SUBMITTEDDUPLICATE TRADE REPORTS TO ACT FOR TRANSACTIONS IN NASDAQNATIONAL MARKET (NNM) SECURITIES; FAILED TO REPORT THE CORRECTCAPACITY TO ACT; FAILED TO CORRECTLY REPORT TRANSACTIONS AS "LONG" OR "SHORT"; FAILED TO CORRECTLY REPORT "RISKLESS"PRINCIPAL TRANSACTIONS IN NNM, NASDAQ SMALLCAP, CONSOLIDATEDQUOTATION SYSTEM (CQS) AND OTC BULLETIN BOARD SECURITIES ANDFAILED TO PROPERLY UTILIZE THE ".PRP" MODIFIER IN TRANSACTIONSINVOLVING NNM SECURITIES. NASD ALSO FOUND THAT THE FIRM FAILEDTO ACCURATELY MARK SALES ON THE FIRM'S TRADING LEDGER AS "LONG" OR "SHORT"; EXECUTED CUSTOMER SHORT SALES ANDPROPRIETARY SHORT SALES IN SECURITIES IN WHICH THE FIRM WAS NOTA BONA FIDE MARKET MAKER AND FAILED TO MAKE THE REQUIRED "AFFIRMATIVE DETERMINATION"; EXECUTED CUSTOMER SHORT SALETRANSACTIONS IN CERTAIN NNM SECURITIES AT OR BELOW THECURRENT INSIDE BID WHEN THE CURRENT INSIDE BID WAS BELOW THEPRECEDING INSIDE BID IN THE SECURITY AND EXECUTED PROPRIETARYSHORT SALE ORDERS IN A SECURITY IN WHICH THE FIRM WAS NOT ABONA FIDE MARKET MAKER AND FAILED TO FULFILL THE ESTABLISHEDLOCATE REQUIREMENT". IN ADDITION, NASD FOUND THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULESCONCERNING SEC RULES 15C2-11, 203(A) (LONG SALES) AND 203(B)(3)(THRESHOLD SECURITIES), NASD RULE 6740 (CURRENTLY RULE 6640),TRACE; ORDER HANDLING AND EXECUTION, BEST EXECUTION, TRADEREPORTING, SALES TRANSACTIONS, REGISTRATION; ANTI-INTIMIDATION/COORDINATION; SOFT DOLLARS, ORDER AUDIT TRAILSYSTEM (OATS), OTHER TRADING RULES (BOOKS AND RECORDS) ANDNASD RULES 3110(B)(1) (MARKING TICKETS), 3350 (BID TEST), 3370(PROMPT RECEIPT AND DELIVERY OF SECURITIES) AND 6130(D)(6) (TRADEREPORT INPUT).


Initiated By: NASD


Censure






Allegations: SEC RULES 10B-10, 200(G), 203(B), 605 (FORMERLY 11AC1-5), NASD RULES2110, 3010, 3350, 3370 AND NASD MARKETPLACE RULES 4632, 4642, 6130,6230, 6420, 6620, 6640 (FORMERLY 6740), AND 6955.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES & COMPANY,INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM WAS CENSURED, FINED $525,000 ANDREQUIRED TO REVISE THE FIRM'S WRITTEN SUPERVISORY PROCEDURESWITH RESPECT TO SEC RULES 15C2-11, 203(A) (LONG SALES) AND203(B)(3) (THRESHOLD SECURITIES), NASD RULE 6740 (CURRENTLY RULE6640), TRACE; ORDER HANDLING AND EXECUTION, BEST EXECUTION,TRADE REPORTING, SALES TRANSACTIONS, REGISTRATION; ANTI-INTIMIDATION/COORDINATION; SOFT DOLLARS, ORDER AUDIT TRAILSYSTEM (OATS), OTHER TRADING RULES (BOOKS AND RECORDS) ANDNASD RULES 3110(B)(1) (MARKING TICKETS), 3350 (BID TEST), 3370(PROMPT RECEIPT AND DELIVERY OF SECURITIES) AND 6130(D)(6) (TRADEREPORT INPUT).







www.finra.org/brokercheck User GuidanceWITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES & COMPANY,INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM WAS CENSURED, FINED $525,000 ANDREQUIRED TO REVISE THE FIRM'S WRITTEN SUPERVISORY PROCEDURESWITH RESPECT TO SEC RULES 15C2-11, 203(A) (LONG SALES) AND203(B)(3) (THRESHOLD SECURITIES), NASD RULE 6740 (CURRENTLY RULE6640), TRACE; ORDER HANDLING AND EXECUTION, BEST EXECUTION,TRADE REPORTING, SALES TRANSACTIONS, REGISTRATION; ANTI-INTIMIDATION/COORDINATION; SOFT DOLLARS, ORDER AUDIT TRAILSYSTEM (OATS), OTHER TRADING RULES (BOOKS AND RECORDS) ANDNASD RULES 3110(B)(1) (MARKING TICKETS), 3350 (BID TEST), 3370(PROMPT RECEIPT AND DELIVERY OF SECURITIES) AND 6130(D)(6) (TRADEREPORT INPUT).

Disclosure 56 of 85

i


Allegations: SEC RELEASE 34-54861: SECTION 17(E)(1) OF THE INVESTMENT COMPANYACT, WITHIN THE MEANING OF SECTIONS 15(B)(4)(E), 17(A)(1) OF THEEXCHANGE ACT AND RULE 17A-3 - THE SECURITIES AND EXCHANGECOMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESISTPROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934("EXCHANGE ACT") AGAINST JEFFERIES & CO., INC. ("JEFFERIES" OR THE "FIRM") IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS,RESPONDENTS JEFFERIES SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER") THAT THE COMMISSION HAS DETERMINED TO ACCEPT. AFTERPROVIDING A REGISTERED REPRESENTATIVE AND HIS TEAM WITH ANANNUAL T&E BUDGET OF $1.5 MILLION TO SPEND ON THE FUNDADVISER'S EMPLOYEES, JEFFERIES FAILED REASONABLY TO IMPLEMENTITS EXISTING POLICIES AND PROCEDURES AND FAILED TO DEVELOP NEWPROCEDURES TO DETERMINE WHETHER HE PROVIDED THEM WITHCOMPENSATION IN VIOLATION OF SECTION 17(E)(1) OF THE INVESTMENTCOMPANY ACT. THE REPRESENTATIVE WAS NOT REQUIRED TO OBTAINPRIOR APPROVAL FOR HIS T&E EXPENDITURES OR TO ACCOUNT FOR HISUSE OF PRE-PAID PRIVATE PLANE HOURS, WHICH ENABLED HIM TO MAKEPRIVATE PLANES AVAILABLE TO SOME OF THE FUND ADVISER'SEMPLOYEES FOR THEIR PERSONAL USE WITHOUT FIRM OVERSIGHT.ALTHOUGH HIS IMMEDIATE SUPERVISOR, DID REVIEW REQUESTS FORREIMBURSEMENT OF T&E EXPENSES, HE ROUTINELY APPROVEDVOUCHERS THAT INDICATED, ON THEIR FACE, THAT THE REP HAD GIVENSOME OF THE FUND ADVISER'S EMPLOYEES ITEMS WORTH MORE THAN$100, IN VIOLATION OF THE FIRM'S POLICY, OR THAT HE HAD NOTACCOMPANIED THE FUND ADVISER'S EMPLOYEES ON A PRIVATE PLANEFLIGHT OR TO A PARTICULAR EVENT, IN WHICH CASE THE EXPENSESWERE GIFTS AND COULD NOT PROPERLY BE REIMBURSED UNDER THEFIRM'S POLICY. FURTHER, JEFFERIES BOOKS AND RECORDS OFEXPENSES WERE INACCURATE AS A RESULT OF ITS APPROVAL OFVOUCHERS IN WHICH THE PERSONAL USE OF THE FUNDS WASCHARACTERIZED AS REIMBURSABLE.









Cease and Desist



Docket/Case Number: SEC ADMIN FILE 3-12495/REL 34-54861


Other Product Type(s): BOOKS AND RECORDS

SEC RELEASE 34-54861: SECTION 17(E)(1) OF THE INVESTMENT COMPANYACT, WITHIN THE MEANING OF SECTIONS 15(B)(4)(E), 17(A)(1) OF THEEXCHANGE ACT AND RULE 17A-3 - THE SECURITIES AND EXCHANGECOMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESISTPROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934("EXCHANGE ACT") AGAINST JEFFERIES & CO., INC. ("JEFFERIES" OR THE "FIRM") IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS,RESPONDENTS JEFFERIES SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER") THAT THE COMMISSION HAS DETERMINED TO ACCEPT. AFTERPROVIDING A REGISTERED REPRESENTATIVE AND HIS TEAM WITH ANANNUAL T&E BUDGET OF $1.5 MILLION TO SPEND ON THE FUNDADVISER'S EMPLOYEES, JEFFERIES FAILED REASONABLY TO IMPLEMENTITS EXISTING POLICIES AND PROCEDURES AND FAILED TO DEVELOP NEWPROCEDURES TO DETERMINE WHETHER HE PROVIDED THEM WITHCOMPENSATION IN VIOLATION OF SECTION 17(E)(1) OF THE INVESTMENTCOMPANY ACT. THE REPRESENTATIVE WAS NOT REQUIRED TO OBTAINPRIOR APPROVAL FOR HIS T&E EXPENDITURES OR TO ACCOUNT FOR HISUSE OF PRE-PAID PRIVATE PLANE HOURS, WHICH ENABLED HIM TO MAKEPRIVATE PLANES AVAILABLE TO SOME OF THE FUND ADVISER'SEMPLOYEES FOR THEIR PERSONAL USE WITHOUT FIRM OVERSIGHT.ALTHOUGH HIS IMMEDIATE SUPERVISOR, DID REVIEW REQUESTS FORREIMBURSEMENT OF T&E EXPENSES, HE ROUTINELY APPROVEDVOUCHERS THAT INDICATED, ON THEIR FACE, THAT THE REP HAD GIVENSOME OF THE FUND ADVISER'S EMPLOYEES ITEMS WORTH MORE THAN$100, IN VIOLATION OF THE FIRM'S POLICY, OR THAT HE HAD NOTACCOMPANIED THE FUND ADVISER'S EMPLOYEES ON A PRIVATE PLANEFLIGHT OR TO A PARTICULAR EVENT, IN WHICH CASE THE EXPENSESWERE GIFTS AND COULD NOT PROPERLY BE REIMBURSED UNDER THEFIRM'S POLICY. FURTHER, JEFFERIES BOOKS AND RECORDS OFEXPENSES WERE INACCURATE AS A RESULT OF ITS APPROVAL OFVOUCHERS IN WHICH THE PERSONAL USE OF THE FUNDS WASCHARACTERIZED AS REIMBURSABLE.


Resolution:

Other Sanctions Ordered: UNDRERTAKINGS

Sanction Details: SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHERPROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TOWHICH THE COMMISSION IS A PARTY AND WITHOUT ADMITTING ORDENYING THE FINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'SJURISDICTION OVER THE FIRM AND THE SUBJECT MATTER OF THESEPROCEEDINGS, WHICH ARE ADMITTED, RESPONDENTS JEFFERIESCONSENTS TO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVEAND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, ANDIMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDERPURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGEACT OF 1934 ("ORDER"). IT IS HEREBY ORDERED THAT RESPONDENTJEFFERIES: CEASE AND DESIST FROM COMMITTING OR CAUSING ANYVIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 17(A)(1) OF THEEXCHANGE ACT AND RULE 17A-3 THEREUNDER; BE, AND HEREBY IS,CENSURED; SHALL, WITHIN 10 DAYS OF THE ENTRY OF THIS ORDER, PAYDISGORGEMENT OF $4,214,945.65 AND PREJUDGMENT INTEREST OF$580,316.26 TO THE SECURITIES AND EXCHANGE COMMISSION; SHALLCOMPLY WITH ITS UNDERTAKINGS: JEFFERIES SHALL RETAIN, WITHIN 30DAYS OF THE DATE OF THIS ORDER, THE SERVICES OF AN INDEPENDENTCOMPLIANCE CONSULTANT NOT UNACCEPTABLE TO THE STAFF OF THECOMMISSION TO CONDUCT A COMPREHENSIVE REVIEW OF JEFFERIES'SUPERVISORY, COMPLIANCE, AND OTHER POLICIES AND PROCEDURESDESIGNED TO DETECT AND PREVENT BREACHES OF THE FIRM'S POLICIESAND THE FEDERAL SECURITIES LAWS WITH RESPECT TO THE PROVISIONOF GIFTS, TRAVEL, AND ENTERTAINMENT BY JEFFERIES AND ITSEMPLOYEES. JEFFERIES SHALL ADOPT ALL RECOMMENDATIONSCONTAINED IN THE REPORT OF THE INDEPENDENT COMPLIANCECONSULTANT; PROVIDED, HOWEVER, THAT WITHIN 150 DAYS FROM THEDATE OF THE ENTRY OF THIS ORDER, JEFFERIES SHALL IN WRITINGADVISE THE INDEPENDENT COMPLIANCE CONSULTANT AND THE STAFFOF THE COMMISSION OF ANY RECOMMENDATIONS THAT IT CONSIDERSTO BE UNNECESSARY OR INAPPROPRIATE. [CONTINUED IN COMMENTS]


No

Sanctions Ordered: CensureDisgorgement/RestitutionCease and Desist/Injunction

Order






SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHERPROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TOWHICH THE COMMISSION IS A PARTY AND WITHOUT ADMITTING ORDENYING THE FINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'SJURISDICTION OVER THE FIRM AND THE SUBJECT MATTER OF THESEPROCEEDINGS, WHICH ARE ADMITTED, RESPONDENTS JEFFERIESCONSENTS TO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVEAND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, ANDIMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDERPURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGEACT OF 1934 ("ORDER"). IT IS HEREBY ORDERED THAT RESPONDENTJEFFERIES: CEASE AND DESIST FROM COMMITTING OR CAUSING ANYVIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 17(A)(1) OF THEEXCHANGE ACT AND RULE 17A-3 THEREUNDER; BE, AND HEREBY IS,CENSURED; SHALL, WITHIN 10 DAYS OF THE ENTRY OF THIS ORDER, PAYDISGORGEMENT OF $4,214,945.65 AND PREJUDGMENT INTEREST OF$580,316.26 TO THE SECURITIES AND EXCHANGE COMMISSION; SHALLCOMPLY WITH ITS UNDERTAKINGS: JEFFERIES SHALL RETAIN, WITHIN 30DAYS OF THE DATE OF THIS ORDER, THE SERVICES OF AN INDEPENDENTCOMPLIANCE CONSULTANT NOT UNACCEPTABLE TO THE STAFF OF THECOMMISSION TO CONDUCT A COMPREHENSIVE REVIEW OF JEFFERIES'SUPERVISORY, COMPLIANCE, AND OTHER POLICIES AND PROCEDURESDESIGNED TO DETECT AND PREVENT BREACHES OF THE FIRM'S POLICIESAND THE FEDERAL SECURITIES LAWS WITH RESPECT TO THE PROVISIONOF GIFTS, TRAVEL, AND ENTERTAINMENT BY JEFFERIES AND ITSEMPLOYEES. JEFFERIES SHALL ADOPT ALL RECOMMENDATIONSCONTAINED IN THE REPORT OF THE INDEPENDENT COMPLIANCECONSULTANT; PROVIDED, HOWEVER, THAT WITHIN 150 DAYS FROM THEDATE OF THE ENTRY OF THIS ORDER, JEFFERIES SHALL IN WRITINGADVISE THE INDEPENDENT COMPLIANCE CONSULTANT AND THE STAFFOF THE COMMISSION OF ANY RECOMMENDATIONS THAT IT CONSIDERSTO BE UNNECESSARY OR INAPPROPRIATE. [CONTINUED IN COMMENTS]

Regulator Statement WITH RESPECT TO ANY RECOMMENDATION THAT JEFFERIES CONSIDERSUNNECESSARY OR INAPPROPRIATE, JEFFERIES NEED NOT ADOPT THATRECOMMENDATION AT THAT TIME BUT SHALL PROPOSE IN WRITING ANALTERNATIVE POLICY, PROCEDURE, OR SYSTEM DESIGNED TO ACHIEVETHE SAME OBJECTIVE OR PURPOSE.C. AS TO ANY RECOMMENDATION WITH RESPECT TO JEFFERIES=POLICIES AND PROCEDURES ON WHICH JEFFERIES AND THEINDEPENDENT COMPLIANCE CONSULTANT DO NOT AGREE, SUCH PARTIESSHALL ATTEMPT IN GOOD FAITH TO REACH AN AGREEMENT WITHIN 180DAYS OF THE DATE OF THE ENTRY OF THIS ORDER. IN THE EVENTJEFFERIES AND THE INDEPENDENT COMPLIANCE CONSULTANT AREUNABLE TO AGREE ON AN ALTERNATIVE PROPOSAL ACCEPTABLE TO THESTAFF OF THE COMMISSION, JEFFERIES WILL ABIDE BY THEDETERMINATIONS OF THE INDEPENDENT COMPLIANCE CONSULTANT. NOLATER THAN TWELVE MONTHS AFTER THE DATE OF ENTRY OF THISORDER, THE CHIEF EXECUTIVE OFFICER OF JEFFERIES SHALL CERTIFYTO THE COMMISSION IN WRITING THAT JEFFERIES HAS FULLY ADOPTEDAND COMPLIED IN ALL MATERIAL RESPECTS WITH THE UNDERTAKINGSAND WITH THE RECOMMENDATIONS OF THE INDEPENDENT COMPLIANCECONSULTANT OR, IN THE EVENT OF MATERIAL NON-ADOPTION OR NON-COMPLIANCE, SHALL DESCRIBE SUCH MATERIAL NON-ADOPTION ANDNON-COMPLIANCE.JEFFERIES SHALL PRESERVE FOR A PERIOD NOT LESSTHAN SIX YEARS FROM THE END OF THE FISCAL YEAR LAST USED, THEFIRST TWO YEARS IN AN EASILY ACCESSIBLE PLACE, ANY RECORD OFJEFFERIES' COMPLIANCE WITH THE UNDERTAKINGS.

iReporting Source: 141©2020 FINRA. All rights reserved. Report about JEFFERIES LLC






Initiated By: SEC


Cease and Desist


DISGORGEMENT.CENSURE.


Docket/Case Number: FILE NO. 3-12495



Allegations: FAILURE REASONABLY TO SUPERVISE EMPLOYEE, WITH A VIEW TOPREVENTING AND DETECTING HIS AIDING AND ABETTING VIOLATIONS OFSECTION 17(E)(1)OF THE INVESTMENT COMPANY ACT, WITHIN THEMEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT



Resolution:

Other Sanctions Ordered: UNDERTAKING TO RETAIN AN INDEPENDENT CONSULTANT, NOTUNACCEPTABLE TO THE STAFF OF THE COMMISSION, TO CONDUCT ACOMPREHENSIVE REVIEW OF THE ADEQUACY OF THE FIRM'S POLICIES,SYSTEMS AND PROCEDURES DESIGNED TO DETECT AND PREVENTBREACHES OF THE FIRM'S POLICIES AND THE FEDERAL SECURITIES LAWSWITH RESPECT TO THE PROVISION OF GIFTS, TRAVEL, ANDENTERTAINMENT BY JEFFERIES AND ITS EMPLOYEES.

Sanction Details: DISGORGEMENT OF $4,214,945.65 AND PREJUDEGEMENT INTEREST OF$580,316.25.

Sanctions Ordered: CensureDisgorgement/RestitutionCease and Desist/Injunction

Settled

Disclosure 57 of 85

i


Allegations: NASD RULES 2110, 3010 AND 3060 THE FIRM, ACTING THROUGH AREGISTERED REPRESENTATIVE, ENGAGED IN PROHIBITED CONDUCT BYGIVING IMPERMISSIBLE GIFTS TO, AND ENGAGING IN EXCESSIVEENTERTAINMENT OF, CERTAIN TRADERS. THE FIRM FAILED TOREASONABLY SUPERVISE THE REPRESENTATIVE'S USE OF HIS LAVISHTRAVEL AND ENTERTAINMENT BUDGET. THE FIRM, THROUGH ONE OF ITSMANAGERS, ROUTINELY AND REPEATEDLY REIMBURSED THEREPRESENTATIVE FOR GIFTS HE CONFERRED TO CERTAIN TRADERSWHICH EXCEEDED THE LIMITS IMPOSED BY NASD 3060. MOREOVER, THEFIRM ROUTINELY APPROVED THE REPRESENTATIVE'S REQUESTS FORREIMBURSEMENT FOR ENTERTAINMENT EXPENSES HE CLAIMED TO HAVEINCURRED WHILE ENTERTAINING TRADERS, WHERE SUCHENTERTAINMENT ALSO VIOLATED NASD RULE 3060. IN ADDITION, THEFIRM FAILED TO CREATED OR IMPLEMENT AN ADEQUATE SUPERVISORYSYSTEM, OR TO ADOPT AND MAINTAIN ADEQUATE WRITTEN SUPERVISORYPROCEDURES THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE GIFT OR ENTERTAINMENT LIMITATIONS IMPOSEDBY NASD RULE 3060.







Initiated By: NASD




Docket/Case Number: E022004009802



NASD RULES 2110, 3010 AND 3060 THE FIRM, ACTING THROUGH AREGISTERED REPRESENTATIVE, ENGAGED IN PROHIBITED CONDUCT BYGIVING IMPERMISSIBLE GIFTS TO, AND ENGAGING IN EXCESSIVEENTERTAINMENT OF, CERTAIN TRADERS. THE FIRM FAILED TOREASONABLY SUPERVISE THE REPRESENTATIVE'S USE OF HIS LAVISHTRAVEL AND ENTERTAINMENT BUDGET. THE FIRM, THROUGH ONE OF ITSMANAGERS, ROUTINELY AND REPEATEDLY REIMBURSED THEREPRESENTATIVE FOR GIFTS HE CONFERRED TO CERTAIN TRADERSWHICH EXCEEDED THE LIMITS IMPOSED BY NASD 3060. MOREOVER, THEFIRM ROUTINELY APPROVED THE REPRESENTATIVE'S REQUESTS FORREIMBURSEMENT FOR ENTERTAINMENT EXPENSES HE CLAIMED TO HAVEINCURRED WHILE ENTERTAINING TRADERS, WHERE SUCHENTERTAINMENT ALSO VIOLATED NASD RULE 3060. IN ADDITION, THEFIRM FAILED TO CREATED OR IMPLEMENT AN ADEQUATE SUPERVISORYSYSTEM, OR TO ADOPT AND MAINTAIN ADEQUATE WRITTEN SUPERVISORYPROCEDURES THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE GIFT OR ENTERTAINMENT LIMITATIONS IMPOSEDBY NASD RULE 3060.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES & COMPANY,INC. CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE THE FIRM IS CENSURED, FINED 5.5 MILLION,PAYABLE WITHIN 30 DAYS AND REQUIRED TO RETAIN INDEPENDENTCONSULTANT TO REVIEW AND MAKE RECOMMENDATIONS FORIMPROVEMENTS TO THE FIRM'S POLICIES AND PROCEDURES FORCOMPLIANCE WITH RULE 3060.


No







https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E022004009802


WITHOUT ADMITTING OR DENYING THE FINDINGS, JEFFERIES & COMPANY,INC. CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE THE FIRM IS CENSURED, FINED 5.5 MILLION,PAYABLE WITHIN 30 DAYS AND REQUIRED TO RETAIN INDEPENDENTCONSULTANT TO REVIEW AND MAKE RECOMMENDATIONS FORIMPROVEMENTS TO THE FIRM'S POLICIES AND PROCEDURES FORCOMPLIANCE WITH RULE 3060.


Initiated By: NASD


Censure


FINE.


Docket/Case Number: EO 22004009802



Allegations: FAILURE TO ESTABLISH AND MAINTAIN AN ADEQUATE SUPERVISORYSYSTEM AND FAILURE TO ADOPT AND MAINTAIN ADEQUATE WRITTENSUPERVISORY PROCEDURES WHICH WERE DESIGNED TO ACHIEVECOMPLIANCE WITH RULE 3060.



Resolution:

Other Sanctions Ordered: UNDERTAKING TO RETAIN AN INDEPENDENT CONSULTANT, NOTUNACCEPTABLE TO THE NASD STAFF, TO CONDUCT A COMPREHENSIVEREVIEW OF THE ADEQUACY OF THE FIRM'S POLICIES, SYSTEMS ANDPROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING RELATED TOTHE FIRM'S ENTERTAINMENT OF (INCLUDING ANY TRAVEL), AND GIFTS TO,CUSTOMERS AND PROSPECTIVE CUSTOMERS OF THE FIRM, INCLUDINGCOMPLIANCE WITH RULE 3060.

Sanction Details: FINE IN THE AMOUNT OF $5,500,000.00.



Disclosure 58 of 85

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Initiated By: CONNECTICUT





Docket/Case Number: CO-06-7312-S

URL for Regulatory Action:



Allegations: THE SEPTEMBER 8, 2006 CONSENT ORDER ALLEGED THAT, FROM 1999 TO2006, THE FIRM EMPLOYED UNREGISTERED BROKER-DEALER AGENTS ATITS BRANCH OFFICE LOCATED AT ONE STATION PLACE, SUITE THREENORTH, STAMFORD, CONNECTICUT.



Resolution:

Other Sanctions Ordered: THE CONSENT ORDER DIRECTED THE FIRM TO REFRAIN FROMREGULATORY VIOLATIONS; IMPLEMENT REVISED SUPERVISORY ANDCOMPLIANCE PROCEDURES; AND PAY $14,450 TO THE DEPARTMENT. OFTHE AMOUNT ASSESSED, $10,000 CONSTITUTED AN ADMINISTRATIVE FINEAND $4,450 REPRESENTED REIMBURSEMENT FOR PAST DUEREGISTRATION FEES.

Sanction Details: PLEASE SEE RESPONSE TO ITEM 13.B.


No


Consent








Initiated By: CONNECTICUT


Other


CONSENT


Docket/Case Number: CO-06-7312-S



Allegations: THE CONSENT ALLEGED THAT FROM 1999 TO 2006, THE FIRM EMPLOYEDCERTAIN REPRESENTATIVES WHO WERE NOT REGISTERED WITH THESTATE OF CONNECTICUT AS BROKER-DEALER AGENTS OF THE FIRMSSTAMFORD, CT BRANCH OFFICE.


Resolution:

Other Sanctions Ordered: THE CONSENT ORDER DIRECTED THE FIRM TO REFRAIN FROMREGULATORY VIOLATIONS; IMPLEMENT REVISED SUPERVISORY ANDCOMPLIANCE PROCEDURES; AND PAY $14,450 TO THE DEPARTMENT($10,000 ADMINISTRATIVE FINE AND $4,450 REIMBURSEMENT FOR PASTDUE REGISTRATION FEES.

Sanction Details: SEE RESPONSE TO ITEM 12B


Consent

Disclosure 59 of 85

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Allegations: SEC RULE 14E-4, NASD RULES 2110, 3010(A), 3010(B) - IN CONNECTIONWITH A MODIFIED DUTCH AUCTION PARTIAL TENDER OFFER,RESPONDENT MEMBER TENDERED 158,000 SHARES OF STOCK BUT WASNOT THE BENEFICIAL OWNER OF THOSE SHARES, SOME OF THE SHARESHAD BEEN BORROWED FROM OTHER FIRMS, AND SOME WERE HELD BYJEFFERIES IN ITS CAPACITY AS A CLEARING FIRM AND WOULD BERELEASED UPON SETTLEMENT. THE FINDINGS STATED THAT ALTHOUGHTHE FIRM DID NOT HOLD A NET LONG POSITION, IT CAUSED THE FIRM TOSUBMIT A TENDER OF 158,000 SHARES IN A PRINCIPAL CAPACITY AT$69/SHARE, WHICH COMMITTED THE FIRM TO DELIVER THE SHARES IFTHE ISSUER ACCEPTED THE TENDER AND WAS OBLIGATED TO DELIVER154,925 SHARES TO THE ISSUER BUT FAILED TO DELIVER THEM. NASDFOUND THAT THE FIRM FAILED TO CREATE OR IMPLEMENT ASUPERVISORY SYSTEM, OR TO ADOPT WRITTEN SUPERVISORYPROCEDURES THAT WERE REASONABLE DESIGNED TO ACHIEVECOMPLIANCE WITH SECURITIES LAWS AND REGULATIONS AND NASDRULES. IN ADDITION, NASD FOUND THAT THE FIRM DID NOT ESTABLISH,MAINTAIN AND ENFORCE WRITTEN SUPERVISORY PROCEDURESREGARDING ITS SUPERVISORY SYSTEM THAT GOVERNED THE ACTIVITIESOF ITS CORPORATE ACTIONS DEPARTMENT.







Initiated By: NASD






Other Product Type(s): CLASS B COMMON STOCK

SEC RULE 14E-4, NASD RULES 2110, 3010(A), 3010(B) - IN CONNECTIONWITH A MODIFIED DUTCH AUCTION PARTIAL TENDER OFFER,RESPONDENT MEMBER TENDERED 158,000 SHARES OF STOCK BUT WASNOT THE BENEFICIAL OWNER OF THOSE SHARES, SOME OF THE SHARESHAD BEEN BORROWED FROM OTHER FIRMS, AND SOME WERE HELD BYJEFFERIES IN ITS CAPACITY AS A CLEARING FIRM AND WOULD BERELEASED UPON SETTLEMENT. THE FINDINGS STATED THAT ALTHOUGHTHE FIRM DID NOT HOLD A NET LONG POSITION, IT CAUSED THE FIRM TOSUBMIT A TENDER OF 158,000 SHARES IN A PRINCIPAL CAPACITY AT$69/SHARE, WHICH COMMITTED THE FIRM TO DELIVER THE SHARES IFTHE ISSUER ACCEPTED THE TENDER AND WAS OBLIGATED TO DELIVER154,925 SHARES TO THE ISSUER BUT FAILED TO DELIVER THEM. NASDFOUND THAT THE FIRM FAILED TO CREATE OR IMPLEMENT ASUPERVISORY SYSTEM, OR TO ADOPT WRITTEN SUPERVISORYPROCEDURES THAT WERE REASONABLE DESIGNED TO ACHIEVECOMPLIANCE WITH SECURITIES LAWS AND REGULATIONS AND NASDRULES. IN ADDITION, NASD FOUND THAT THE FIRM DID NOT ESTABLISH,MAINTAIN AND ENFORCE WRITTEN SUPERVISORY PROCEDURESREGARDING ITS SUPERVISORY SYSTEM THAT GOVERNED THE ACTIVITIESOF ITS CORPORATE ACTIONS DEPARTMENT.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, JEFFRIES &COMPANY, INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED$100,000.


No










Initiated By: NASD


Censure


CENSURE AND FINE.





Allegations: RESPONDENT ACCEPTED AND CONSENTED TO THE FOLLOWINGALLEGATIONS OR FINDINGS BY NASD WITHOUT ADMITTING OR DENYINGTHE FINDINGS: IN THE FIRST QUARTER OF 2003 IN CONNECTION WITH ATENDER OFFER, RESPONDENT TENDERED AN AMOUNT OF SHARES THATWAS GREATER THAN ITS EXISTING NET LONG POSITION AND FAILED TODELIVER THE TENDERED SHARES AFTER THE TENDER OFFER WASACCEPTED IN VIOLATION OF SEC AND NASD RULES. RESPONDENTFAILED TO CREATE OR IMPLEMENT A SUPERVISORY SYSTEM OR TOADOPT WRITTEN SUPERVISORY PROCEDURES THAT WERE REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH SECURITIES LAWS ANDREGULATIONS AND NASD RULES WITH RESPECT TO A PARTICULAREMPLOYEE'S ACTIVITIES. RESPONDENT'S SUPERVISORY SYSTEM WASREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS AND REGULATIONS AND NASD RULES BY ITSCORPORATE ACTIONS DEPARTMENT, DURING THE PERIOD FROMJANUARY 1, 2003, UNTIL ON OR ABOUT DECEMBER 31, 2003, BUTRESPONDENT DID NOT ESTABLISH, MAINTAIN AND ENFORCE WRITTENSUPERVISORY PROCEDURES SETTING FORTH THAT PORTION OF ITSSUPERVISORY SYSTEM THAT GOVERNED THE ACTIVITIES OF THECORPORATE ACTIONS DEPARTMENT.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS OR FINDINGS,RESPONDENT CONSENTED TO A CENSURE AND FINE OF $100,000.









Disclosure 60 of 85

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Initiated By: NASD




Allegations: SEC RULES 10B-10, 11AC1-4, 11AC1-5, 17A-3, 17A-4, NASD RULE 2110, 3010,3110, 3370, 4632, 6130, 6130(B), 6130(D), 6620, 6620(A), 6955(A) -RESPONDENT MEMBER FAILED TO DISPLAY IMMEDIATELY CUSTOMERLIMIT ORDERS IN NASDAQ SECURITIES IN ITS PUBLIC QUOTATION, WHENEACH SUCH ORDER WAS AT A PRICE THAT WOULD HAVE IMPROVEDFIRM'S BID OR OFFER IN EACH SUCH SECURITY; OR WHEN THE ORDERWAS PRICED EQUAL TO FIRM'S BID OR OFFER AND THE NATIONAL BESTBID OR OFFER FOR EACH SUCH SECURITY, AND THE SIZE OF THE ORDERREPRESENTED MORE THAN A DE MINIMIS CHANGE IN RELATION TO THESIZE ASSOCIATED WITH FIRM'S BID OR OFFER IN EACH SUCH SECURITY;FIRM FAILED TO PRESERVE FOR A PERIOD OF NOT LESS THAN THREEYEARS IN AN ACCESSIBLE PLACE, THE MEMORANDUM OF BROKERAGEORDERS; FIRM FAILED TO ACCEPT OR DECLINE IN THE AUTOMATEDCONFIRMATION TRANSACTION SERVICE (ACT), TRANSACTIONS INELIGIBLE SECURITIES WITHIN 20 MINUTES AFTER EXECUTION,INCORRECTLY DESIGNATED AS ".PRP" THROUGH ACT LAST SALEREPORTS OF TRANSACTIONS, AND MEDIA REPORTED RISKLESSPRINCIPAL TRANSACTIONS IN NASDAQ NATIONAL MARKET (NNM)SECURITIES; FAILED TO REPORT TO ACT THE CORRECT SYMBOLINDICATING WHETHER THE FIRM EXECUTED TRANSACTIONS IN ELIGIBLESECURITIES IN A PRINCIPAL, RISKLESS PRINCIPAL OR AGENCY CAPACITY,AND WHETHER THE TRANSACTION WAS A BUY, SELL, SELL SHORT, SELLSHORT EXEMPT OR CROSS FOR TRANSACTIONS IN ELIGIBLE SECURITIES;FIRM FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITSCUSTOMER ITS CORRECT CAPACITY IN THE TRANSACTION, THAT THETRANSACTION WAS EXECUTED AT AN AVERAGE PRICE, AND THECORRECT REPORTED TRADE PRICE; THE FIRM'S SUPERVISORY SYSTEMDID NOT PROVIDE SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND THE RULES OF NASD CONCERNING FRONTRUNNINGAND TRADE REPORTING, RISKLESS PRINCIPAL CAPACITY, SEC RULES11AC1-5 AND 11AC1-6, CUSTOMER CROSSES, THE THREE QUOTE RULE,RISKLESS PRINCIPAL AND LONG/SHORT, THE BID TEST RULE, AND THEONE PERCENT RULE












Resolution:

Other Sanctions Ordered: UNDERTAKING; REQUIRED TO REVISE IT'S WRITTEN SUPERVISORYPROCEDURES WITH RESPECT TO THE APPLICABLE SECURITIES LAWSAND REGULATIONS, AND THE RULES OF NASD CONCERNINGFRONTRUNNING AND TRADE REPORTING, RISKLESS PRINCIPAL CAPACITY,SEC RULES 11AC1-5 AND 11AC1-6, CUSTOMER CROSSES, THE THREEQUOTE RULE, RISKLESS PRINCIPAL AND LONG/SHORT, THE BID TESTRULE, AND THE ONE PERCENT RULE.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, JEFFERIES &COMPANY, INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED$125,500.

Regulator Statement THE FIRM FAILED WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMITTHROUGH ACT LAST SALE REPORTS OF TRANSACTIONS IN OTC EQUITYSECURITIES AND FAILED TO DESIGNATE SUCH LAST SALE REPORTS ASLATE; FIRM EXECUTED SHORT SALE ORDERS IN CERTAIN SECURITIESAND FAILED TO MAKE AN AFFIRMATIVE DETERMINATION PRIOR TOEXECUTING SUCH TRANSACTIONS, AND INCORRECTLY REPORTEDRISKLESS PRINCIPAL TRANSACTIONS TO ACT IN NNM SECURITIES AND INOTC EQUITY SECURITIES; FIRM INCORRECTLY DESIGNATED AS ".SLD"THROUGH ACT LAST SALE REPORTS OF TRANSACTIONS IN OTC EQUITYSECURITIES REPORTED TO ACT WITHIN 90 SECONDS OF EXECUTION;FAILED TO SUBMIT TO THE ORDER AUDIT TRAIL SYSTEM (OATS), A CANCELREPORT, AN EXECUTION REPORT, A NEW ORDER REPORT AFTERRECEIVING A MODIFICATION TO THE TERMS OF AN ORDER, AND FAILED TORECORD PROPRIETARY SHORT SALES AS SHORT ON ITS TRADINGLEDGER; FAILED TO SHOW THE CORRECT TIME OF EXECUTION ON THEMEMORANDUM OF BROKERAGE ORDERS AND MADE AVAILABLE A REPORTIN NATIONAL MARKET SYSTEM SECURITIES THAT CONTAINED INCORRECTINFORMATION AS TO THE NUMBER OF COVERED ORDERS AND THE TOTALNUMBER OF SHARES.


No








THE FIRM FAILED WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMITTHROUGH ACT LAST SALE REPORTS OF TRANSACTIONS IN OTC EQUITYSECURITIES AND FAILED TO DESIGNATE SUCH LAST SALE REPORTS ASLATE; FIRM EXECUTED SHORT SALE ORDERS IN CERTAIN SECURITIESAND FAILED TO MAKE AN AFFIRMATIVE DETERMINATION PRIOR TOEXECUTING SUCH TRANSACTIONS, AND INCORRECTLY REPORTEDRISKLESS PRINCIPAL TRANSACTIONS TO ACT IN NNM SECURITIES AND INOTC EQUITY SECURITIES; FIRM INCORRECTLY DESIGNATED AS ".SLD"THROUGH ACT LAST SALE REPORTS OF TRANSACTIONS IN OTC EQUITYSECURITIES REPORTED TO ACT WITHIN 90 SECONDS OF EXECUTION;FAILED TO SUBMIT TO THE ORDER AUDIT TRAIL SYSTEM (OATS), A CANCELREPORT, AN EXECUTION REPORT, A NEW ORDER REPORT AFTERRECEIVING A MODIFICATION TO THE TERMS OF AN ORDER, AND FAILED TORECORD PROPRIETARY SHORT SALES AS SHORT ON ITS TRADINGLEDGER; FAILED TO SHOW THE CORRECT TIME OF EXECUTION ON THEMEMORANDUM OF BROKERAGE ORDERS AND MADE AVAILABLE A REPORTIN NATIONAL MARKET SYSTEM SECURITIES THAT CONTAINED INCORRECTINFORMATION AS TO THE NUMBER OF COVERED ORDERS AND THE TOTALNUMBER OF SHARES.


Initiated By: NASD







Other Product Type(s): EQUITY LISTED

Allegations: RESPONDENT MEMBER VIOLATED VARIOUS SEC AND NASD RULESRELATING TO LIMIT ORDER DISPLAY, RECORDKEEPING, TRADEREPORTING, CUSTOMER CONFIRMATIONS, SUPERVISORY PROCEDURES,AFFIRMATIVE DETERMINATION REQUIREMENTS, OATS REPORTING, ACTREPORTING AND 11AC1-5.



Resolution:

Other Sanctions Ordered: AN UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES WITH RESPECT TO THE ALLEGATIONS IN THIS AWC.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO A CENSURE, A FINE OF $125,500 AND THE UNDERTAKINGSET FORTH ABOVE.



Disclosure 61 of 85

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Initiated By: NASD







Allegations: SEC RULE 15C2-11, NASD RULES 2110, 3010, 6740 - RESPONDENT MEMBERPUBLISHED QUOTATIONS FOR OTC EQUITY SECURITIES, OR, DIRECTLY ORINDIRECTLY, SUBMITTED SUCH QUOTATIONS FOR PUBLICATION, IN AQUOTATION MEDIUM, THE PINK SHEETS, AND DID NOT HAVE IN ITSRECORDS THE DOCUMENTATION REQUIRED BY SEC RULE 15C2-11(A);FAILED TO FILE A FORM 211 WITH NASD BEFORE IT'S QUOTATIONS WEREPUBLISHED OR DISPLAYED IN A QUOTATION MEDIUM; FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE SUPERVISION REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TO APPLICABLESECURITIES LAWS AND REGULATIONS, AND THE RULES OF NASDCONCERNING SEC RULE 15C2-11 AND NASD RULE 6740.



Resolution:

Other Sanctions Ordered: UNDERTAKING: REQUIRED TO REVISE IT'S WRITTEN SUPERVISORYPROCEDURES WITH RESPECT TO SEC RULE 15C2-11 AND NASD RULE6740.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, JEFFERIES &COMPANY, INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED$12,500.


No









WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, JEFFERIES &COMPANY, INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED$12,500.


Initiated By: NASD




CENSURE.UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES WITH RESPECT TO 15C2-11.





Allegations: SEC RULE 15C2-11, NASD MARKETPLACE RULE 6740, AND NASD CONDUCTRULES 2110 AND 3010 - RESPONDENT MEMBER PUBLISHED QUOTATIONSFOR OTC EQUITY SECURITIES, OR, DIRECTLY OR INDIRECTLY, SUBMITTEDSUCH QUOTATIONS FOR PUBLICATION, AND (I) DID NOT HAVE IN ITSRECORDS THE DOCUMENTATION REQUIRED BY SEC RULE 15C2-11(A)("PARAGRAPH (A) INFORMATION"); (II) DID NOT HAVE A REASONABLE BASISUNDER THE CIRCUMSTANCES FOR BELIEVING THAT THE PARAGRAPH (A)INFORMATION WAS ACCURATE IN ALL MATERIAL ASPECTS; OR (III) DID NOTHAVE A REASONABLE BASIS UNDER THE CIRCUMSTANCES FORBELIEVING THAT THE SOURCES OF THE PARAGRAPH (A) INFORMATIONWERE RELIABLE.



Resolution:

Other Sanctions Ordered: UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES WITH RESPECT TO 15C2-11.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO CENSURE AND A FINE OF $12,500. THE FIRM ALSOAGREED TO REVISE ITS WRITTEN SUPERVISORY PROCEDURES TOADDRESS THE CONCERNS RAISED IN THIS AWC.



i153©2020 FINRA. All rights reserved. Report about JEFFERIES LLC






Disclosure 62 of 85

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Initiated By: NASD




Docket/Case Number: CLG050100



Allegations: NASD RULES 2110, 3010, 6955(A) - RESPONDENT MEMBER FAILED TOREPORT TO OATS REPORTABLE ORDER EVENTS ("ROES") RELATING TOORDERS IN NASDAQ SECURITIES THAT WERE CAPTURED IN THE FIRM'SELECTRONIC ORDER MANAGEMENT SYSTEM ("OMS"). THE FINDINGSSTATED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONS, ANDTHE RULES OF NASD CONCERNING OATS REPORTING. THE FINDINGSALSO STATED THAT FIRM'S WRITTEN SUPERVISORY PROCEDURES WEREINADEQUATE IN FAILING TO PROVIDE A METHOD FOR THE OATSADMINISTRATOR'S SUPERVISOR TO PERFORM A SUPERVISORY REVIEWOF THE FIRM'S OVERALL OATS REPORTING.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, JEFFERIES &COMPANY INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED$100,000. THE FIRM HAS REVISED ITS SUPERVISORY SYSTEM TOADDRESS THE CONCERNS RAISED IN THIS CASE.


No







https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=CLG050100


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, JEFFERIES &COMPANY INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED$100,000. THE FIRM HAS REVISED ITS SUPERVISORY SYSTEM TOADDRESS THE CONCERNS RAISED IN THIS CASE.


Initiated By: NASD




CENSUREUNDERTAKING


Docket/Case Number: AWC CLG050100



Allegations: NASD CONDUCT RULES 2110 AND 3010 AND NASD MARKETPLACE RULE6955(A) - RESPONDENT MEMBER INCORRECTLY REPORTED OMS ORDERSTO OATS; FAILED TO REPORT OMS INFORMATION TO OATS; FAILED TOADEQUATELY SUPERVISE ITS OATS ADMINISTRATOR; AND, MAINTAINEDINADEQUATE WRITTEN SUPERVISORY PROCEDURES WITH REGARD TOOATS.



Resolution:


Sanction Details: FINE PAID IN FULL ON AUGUST 2, 2005.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO CENSURE AND A FINE OF $100,000 ($75,000 FOR OATSREPORTING VIOLATIONS AND $25,000 FOR SUPERVISORY VIOLATIONS).THE FIRM ALSO AGREED TO REVISE ITS SUPERVISORY SYSTEM TOADDRESS THE CONCERNS RAISED IN THIS AWC.



Disclosure 63 of 85

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Disclosure 63 of 85


Initiated By: NASD



Docket/Case Number: CMS040062



Allegations: NASD CONDUCT RULES 2110, 3010 AND 3110, NASD MARKETPLACERULES 4632(A), 4632(B), 4632(C)(6), 4632(D), 6420(A), 6420(C)5, 6420(D), 6620(B), AND 6620(D) AND SEC RULE 10B-10 - RESPONDENT MEMBER FAILEDWITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMIT THROUGH ACTLAST SALE REPORTS OF TRANSACTIONS IN NASDAQ NATIONAL MARKETSECURITIES AND FILED TO DESIGNATE THROUGH ACT SUCH LAST SALEREPORTS AS LATE; FAILED TO TRANSMIT THE TIME OF EXECUTIONTHROUGH ACT LAST SALES REPORTS OF TRANSACTIONS IN A NASDAQNATIONAL MARKET SECURITIES FOR WHICH IT HAS RECORDING ANDREPORTING OBLIGATIONS UNDER NASD MARKETPLACE RULES 6954 AND6955; FAILED TO REPORT TO ACT A CAPACITY INDICATOR OF RISKLESSPRINCIPAL IN LAST SALE REPORTS OF TRANSACTIONS IN NASDAQNATIONAL MARKET AND ELIGIBLE SECURITIES; FAILED TO REPORTTHROUGH ACT LAST SALE REPORTS OF TRANACTIONS IN OTC EQUITYSECURITIES; FAILED TO REPORT TO ACT A CAPACITY INDICATOR OFRISKLESS PRINCIPAL IN A LAST SALE REPORT OF A TRANSACTION IN ANOTC EQUITY SECURITY; PROVIDED WRITTEN NOTIFICATION DISCLOSINGTO ITS CUSTOMER AN INCORRECT REPORTED TRADE PRICE ANDINCORRECT CAPACITY IN THE TRANSACTION; FAILED TO PROVIDEWRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMER THE AMOUNT OFREMUNERATION RECEIVED BY THE FIRM IN CONNECTION WITH THETRANSACTION; FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSINGTO ITS CUSTOMER THAT THE TRANSACTION WAS EXECUTED AT ANAVERAGE PRICE; FAILED TO SHOW THE TERMS AND CONDITIONS ON THEMEMORANDUM OF BROKERAGE ORDERS; SUPERVISORY SYSTEM DIDNOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS ANDREGULATIONS CONCERNING TRADE REPORTING (RISKLESS PRINCIPALTRANSACTIONS) AND BEST EXECUTION (THREE QUOTE RULE); AND,FAILED TO ENFORCE ITS WRITTEN SUPERVISORY PROCEDURES WITHRESPECT TO LIMIT ORDER DISPLAY.










Resolution:

Other Sanctions Ordered: UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES WITH RESPECT TO TRADE REPORTING AND BESTEXECUTION WITHIN 30 DAYS.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM IS CENSURED, FINED $27,500, AND ANUNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES WITH RESPECT TO TRADE REPORTING AND BESTEXECUTION WITHIN 30 DAYS.


No




Allegations: FOLLOWING THE 2002 REVIEW OF TRADING ACTIVITY, NASD ALLEGEDTHAT IN NMS SECURITIES, JEFFERIES FAILED TO REPORT TIMELY 2 NMSTRANSACTIONS AND FAILED TO DESIGNATE THOSE AS LATE, FAILED TOREPORT 1 NMS TRANSACTION, FAILED TO TRANSMIT THE TIME OFEXECUTION ON 2 TRANSACTIONS, AND FAILED TO REPORT CAPACITY FOR12 TRANSACTIONS. IN ACT-ELIGIBLE SECURITIES, JEFFERIES FAILED TOREPORT TIMELY 2 TRANSACTIONS AND FAILED TO DESIGNATE THOSE ASLATE, FAILED TO TRANSMIT TIME OF EXECUTION ON 1 TRADE, AND FAILEDTO REPORT CAPACITY IN 5 TRANSACTIONS. IN OTC EQUITY, FAILED TOREPORT 4 TRANSACTIONS AND FAILED TO REPORT CAPACITY FOR 1TRANSACTION. ON CUSTOMER CONFIRMATIONS, JEFFERIES FAILED TODISCLOSE THE PROPER TRADE PRICE ON 8 OCCASIONS, PROVIDEDINCORRECT CAPACITY ON 5 OCCASIONS, FAILED TO DISCLOSEREMUNERATION ON 4 OCCASIONS, AND FAILED TO DISCLOSE THAT THETRANSACTION WAS AT AN AVERAGE PRICE ON 3 OCCASIONS. ON ORDERTICKETS, FAILED TO RECORD TERMS AND CONDITIONS ON 9 OCCASIONS.NASD ALSO ALLEGED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH APPLICABLE RULES AND THAT THE FIRM FAILED TOENFORCE ITS WRITTEN SUPERVISORY PROCEDURES.







Initiated By: NASD




A CENSURE AND AN UNDERTAKING TO REVISE THE FIRM'S WRITTENSUPERVISORY PROCEDURES.





FOLLOWING THE 2002 REVIEW OF TRADING ACTIVITY, NASD ALLEGEDTHAT IN NMS SECURITIES, JEFFERIES FAILED TO REPORT TIMELY 2 NMSTRANSACTIONS AND FAILED TO DESIGNATE THOSE AS LATE, FAILED TOREPORT 1 NMS TRANSACTION, FAILED TO TRANSMIT THE TIME OFEXECUTION ON 2 TRANSACTIONS, AND FAILED TO REPORT CAPACITY FOR12 TRANSACTIONS. IN ACT-ELIGIBLE SECURITIES, JEFFERIES FAILED TOREPORT TIMELY 2 TRANSACTIONS AND FAILED TO DESIGNATE THOSE ASLATE, FAILED TO TRANSMIT TIME OF EXECUTION ON 1 TRADE, AND FAILEDTO REPORT CAPACITY IN 5 TRANSACTIONS. IN OTC EQUITY, FAILED TOREPORT 4 TRANSACTIONS AND FAILED TO REPORT CAPACITY FOR 1TRANSACTION. ON CUSTOMER CONFIRMATIONS, JEFFERIES FAILED TODISCLOSE THE PROPER TRADE PRICE ON 8 OCCASIONS, PROVIDEDINCORRECT CAPACITY ON 5 OCCASIONS, FAILED TO DISCLOSEREMUNERATION ON 4 OCCASIONS, AND FAILED TO DISCLOSE THAT THETRANSACTION WAS AT AN AVERAGE PRICE ON 3 OCCASIONS. ON ORDERTICKETS, FAILED TO RECORD TERMS AND CONDITIONS ON 9 OCCASIONS.NASD ALSO ALLEGED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH APPLICABLE RULES AND THAT THE FIRM FAILED TOENFORCE ITS WRITTEN SUPERVISORY PROCEDURES.


Resolution:

Other Sanctions Ordered: AN UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES.

Sanction Details: MONETARY/FINE - 27,500.00.CENSURE.UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES.

Firm Statement FINE PAID ON MAY 12, 2004



Disclosure 64 of 85

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Allegations: NASD CONDUCT RULES 2110 AND 3320, NASD MARKETPLACE RULES4613(B), 4613(E) AND 6620(A), AND SEC RULE 11AC1-1 - RESPONDENTMEMBER FIRM ("FIRM") WAS A MARKET MAKER IN SECURITIES, AND ANORDER WAS PRESENTED TO THE FIRM AT THE FIRM'S PUBLISHED BID ORPUBLISHED OFFER IN AN AMOUNT UP TO ITS PUBLISHED QUOTATION SIZE.THE FIRM FAILED TO EXECUTE THE ORDERS UPON PRESENTMENT ANDTHEREBY FAILED TO HONOR ITS PUBLISHED QUOTATION. IN ADDITION,THE FIRM, A MARKET MAKER IN SECURITIES, WITHOUT MAKINGREASONABLE EFFORTS TO AVOID A LOCKED OR CROSSED MARKET BYEXECUTING TRANSACTIONS WITH ALL MARKET MAKERS WHOSEQUOTATIONS WOULD BE LOCKED OR CROSSED, ENTERED BID OR ASKEDQUOTATIONS IN THE NASDAQ STOCK MARKET, WHICH CAUSED A LOCKEDOR CROSSED MARKET CONDITION TO OCCUR IN EACH INSTANCE. THEFIRM ALSO FAILED, WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMITTHROUGH ACT LAST SALE REPORTS OF TRANSACTIONS INCONSOLIDATED QUOTATION SERVICE ("CQS") AND OTC EQUITYSECURITIES. FURTHERMORE, THE FIRM, WITHIN 90 SECONDS AFTEREXECUTION, TO TRANSMIT THROUGH ACT LAST SALE REPORTS OFTRANSACTIONS IN OTC EQUITY SECURITIES AND FAILED TO DESIGNATETHROUGH ACT SUCH LAST SALE REPORTS AS LATE.







Initiated By: NASD







NASD CONDUCT RULES 2110 AND 3320, NASD MARKETPLACE RULES4613(B), 4613(E) AND 6620(A), AND SEC RULE 11AC1-1 - RESPONDENTMEMBER FIRM ("FIRM") WAS A MARKET MAKER IN SECURITIES, AND ANORDER WAS PRESENTED TO THE FIRM AT THE FIRM'S PUBLISHED BID ORPUBLISHED OFFER IN AN AMOUNT UP TO ITS PUBLISHED QUOTATION SIZE.THE FIRM FAILED TO EXECUTE THE ORDERS UPON PRESENTMENT ANDTHEREBY FAILED TO HONOR ITS PUBLISHED QUOTATION. IN ADDITION,THE FIRM, A MARKET MAKER IN SECURITIES, WITHOUT MAKINGREASONABLE EFFORTS TO AVOID A LOCKED OR CROSSED MARKET BYEXECUTING TRANSACTIONS WITH ALL MARKET MAKERS WHOSEQUOTATIONS WOULD BE LOCKED OR CROSSED, ENTERED BID OR ASKEDQUOTATIONS IN THE NASDAQ STOCK MARKET, WHICH CAUSED A LOCKEDOR CROSSED MARKET CONDITION TO OCCUR IN EACH INSTANCE. THEFIRM ALSO FAILED, WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMITTHROUGH ACT LAST SALE REPORTS OF TRANSACTIONS INCONSOLIDATED QUOTATION SERVICE ("CQS") AND OTC EQUITYSECURITIES. FURTHERMORE, THE FIRM, WITHIN 90 SECONDS AFTEREXECUTION, TO TRANSMIT THROUGH ACT LAST SALE REPORTS OFTRANSACTIONS IN OTC EQUITY SECURITIES AND FAILED TO DESIGNATETHROUGH ACT SUCH LAST SALE REPORTS AS LATE.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $35,000.


No









Initiated By: NASD


Docket/Case Number: CASE NUMBER: CMS030277


Other Product Type(s): CQS

Allegations: MRD200127644 - IN 149 INSTANCES BETWEEN 7/1/00 AND 9/30/00,JEFFERIES ALLEGEDLY FAILED TO EXECUTE AN ORDER UPONPRESENTMENT, THEREBY FAILING TO HONOR THE PUBLISHEDQUOTATION, WHICH VIOLATED SEC RULE 11AC1-1, NASD CONDUCT RULE3320 AND NASD MARKETPLACE RULE 4613(B).MRD200130686 - IN 148 INSTANCES BETWEEN 4/1/01 AND 6/30/01,JEFFERIES ALLEGEDLY FAILED TO EXECUTE AN ORDER UPONPRESENTMENT, THEREBY FAILING TO HONOR THE PUBLISHEDQUOTATION, WHICH VIOLATED SEC RULE 11AC1-1, NASD CONDUCT RULE3320 AND NASD MARKETPLACE RULE 4613(B).MRD200130455 - IN 17 INSTANCES BETWEEN 4/1/01 AND 6/30/01, JEFFERIESALLEGEDLY ENTERED A BID OR ASKED QUOTATION WHICH CAUSED ALOCKED OR CROSSED MARKET, WHICH VIOLATED NASD MARKETPLACERULE 4613(E).MRD200130736 - IN 117 INSTANCES BETWEEN 4/2/01 AND 6/29/01,JEFFERIES ALLEGEDLY FAILED TO TRANSMIT REPORTS OF CQS AND OTCEQUITY SECURITIES TRANSACTIONS TO ACT WITHIN 90 SECONDS AFTEREXECUTION, WHICH VIOLATED NASD CONDUCT RULE 2110.MRD200233302 - IN 152 INSTANCES BETWEEN 10/1/01 AND 12/31/01,JEFFERIES ALLEGEDLY FAILED TO TRANSMIT REPORTS OF CQSTRANSACTIONS TO ACT WITHIN 90 SECONDS AFTER EXECUTION, WHICHVIOLATED NASD CONDUCT RULE 2110.MRD200235668 - IN 130 INSTANCES BETWEEN 11/2/02 AND 4/30/02,JEFFERIES ALLEGEDLY FAILED TO TRANSMIT REPORTS OF OTC EQUITYSECURITIES TO ACT WITHIN 90 SECONDS AFTER EXECUTION, WHICHVIOLATED NASD CONDUCT RULE 2110. ALSO, IN 68 INSTANCES BETWEEN10/1/01 AND 12/31/01, JEFFERIES ALLEGEDLY FAILED TO TRANSMITREPORTS OF OTC EQUITY SECURITIES WITHIN 90 SECONDS OFEXECUTION AND FAILED TO DESIGNATE SUCH SALES AS LATE.MRD200238040 - IN 10 INSTANCES BETWEEN 7/1/02 AND 9/30/02, JEFFERIESALLEGEDLY ENTERED A BID OR ASKED QUOTATION WHICH CAUSED ALOCKED OR CROSSED MARKET, WHICH VIOLATED NASD MARKETPLACERULE 4613(E).








Censure


$35,000 FINE (COMPOSED OF A $7,500 FINE FOR THE FIRM QUOTEVIOLATIONS IN MRD200127644, A $7,500 FINE FOR THE FIRM QUOTEVIOLATIONS IN MRD200130686, A $5,000 FINE FOR THE LOCKED ANDCROSSED MARKET VIOLATIONS IN MRD200130455, A $5,000 FINE FOR THELOCKED AND CROSSED MARKET VIOLATIONS IN MRD200238040, A $5,000FINE FOR THE ACT REPORTING VIOLATIONS IN MRD200130736 ANDMRD200233302, AND A $5,000 FINE FOR THE ACT REPORTING VIOLATIONSIN MRD200235668).

Other Product Type(s): CQS


Resolution:


Sanction Details: SEE ABOVE FOR FINE AMOUNT DETAIL. THE FINE WAS PAID ON 03/23/2003.

Firm Statement AN AWC WAS ACCEPTED BY THE NASD ON NOVEMBER 25, 2003.



Disclosure 65 of 85

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS




Allegations: NASD RULE 4613 - WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,THE FIRM CONSENTED TO THE ENTRY OF FINDINGS THAT, AS A MARKETMAKER IN SECURITIES, THE FIRM WAS A PARTY TO A LOCKED ORCROSSED MARKET CONDITION PRIOR TO THE MARKET OPENING ANDRECEIVED A TRADE-OR-MOVE MESSAGE IN EACH INSTANCE THROUGHSELECTNET? AND WITHIN 30 SECONDS OF RECEIVING SUCH MESSAGES,FAILED TO FILL THE INCOMING TRADE-OR-MOVE MESSAGE FOR THE FULLSIZE OF THE MESSAGE OR MOVE ITS BID DOWN (OFFER UP) BY AQUOTATION INCREMENT THAT WOULD HAVE UNLOCKED/UNCROSSED THEMARKET











Resolution:


Sanction Details: N/A




Initiated By: NASD REGULATION, INC.


Censure


FINE - $15,000.00


Docket/Case Number: MRD200027333



Allegations: IN 35 INSTANCES FROM NOVEMBER 27 THROUGH DECEMBER 8, 2000,JEFFERIES & COMPANY, INC. ("JEFFERIES")WAS A PARTY TO A LOCKED OR CROSSED MARKET CONDITION PRIOR TOTHE MARKET OPENING AND RECEIVED ATRADE-OR-MOVE MESSAGE IN EACH INSTANCE THROUGH SELECTNET.JEFFERIES, WITHIN 30 SECONDS OFRECEIVING SUCH MESSAGES, FAILED TO FILL THE INCOMING TRADE-ORMOVE MESSAGE FOR THE FULLSIZE OF THE MESSAGE OR MOVE ITS BID DOWN (OFFER UP) BY AQUOTATION INCREMENT THAT WOULDHAVE UNLOCKED/UNCROSSED THE MARKET.


Resolution: Acceptance, Waiver & Consent(AWC)162©2020 FINRA. All rights reserved. Report about JEFFERIES LLC






Resolution:


Sanction Details: AWC NO. CMS020023



Disclosure 66 of 85

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.







Allegations: NASD RULE 4613(E) -THE FIRM, A MARKET MAKER IN SECURITIES,WITHOUT MAKING REASONABLE EFFORTS TO AVOID A LOCKED ORCROSSED MARKET BY EXECUTING TRANSACTIONS WITH ALL MARKETMAKERS WHOSE QUOTATIONS WOULD BE LOCKED OR CROSSED,ENTERED A BID OR ASKED QUOTATION IN THE NASDAQ STOCK MARKETWHICH CAUSED A LOCKED OR CROSSED MARKET CONDITION TO OCCURIN EACH INSTANCE.



Resolution:


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, JEFFERIES &COMPANY CONSENTED TO THE DESCRIBED SANCTION AND TO THEENTRY OF FINDINGS, THEREFORE, THE FIRM IS FINED $3,000.








Docket/Case Number: CMS000240 AWC



Allegations: NASDR ALLEGES THAT FROM 01/01/1999 TO 06/30/1999, ON 15 OCCASIONS,JEFFERIES DID NOT MAKE REASONABLEEFFORTS TO AVOID LOCKED OR CROSSED MARKETS.



Resolution:


Sanction Details: PER NASDR INSTRUCTIONS, AWAITING NOTIFICATION FROM NASDRFINANCEDEPARTMENT REGARDING PAYMENT OF FINE

Firm Statement PER NASDR INSTRUCTIONS, AWAITING NOTIFICATION FROM NASDRFINANCEDEPARTMENT REGARDING PAYMENT OF FINE



Disclosure 67 of 85

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Initiated By: BANKING COMMISSIONER, STATE OF CONNECTICUT


Other


REVISE BRANCH OFFICE PROCEDURES TO ENSURE REGULATORYCOMPLIANCE AND REIMBURSE BANKING DEPARTMENT $500.00 FOR ITSCOST OF INVESTIGATION


Docket/Case Number: ST-95-2785-S



Allegations: IN OR ABOUT 1995, JEFFERIES & COMPANY, INC. TRANSACTED BUSINESSFROM A PLACE OF BUSINESS IN CONNECTICUT WITHOUT REGISTERINGTHAT LOCATION AS A BRANCH OFFICE WITH THE STATE OF CONNECTICUT



Resolution:

Other Sanctions Ordered: JEFFERIES & COMPANY, INC. ENTERED INTO A STIPULATION ANDAGREEMENT WHICH REQUIRED IT TO REVISE ITS BRANCH OFFICEPROCEDURES TO ENSURE REGULATORY COMPLIANCE

Sanction Details: THE BANKING DEPARTMENT WAS REIMBURSED $500.00 FOR ITS COST OFINVESTIGATION. PAID ON 07/31/1995

Sanctions Ordered: Monetary/Fine $500.00

Settled

Disclosure 68 of 85

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Allegations: 01-02-00, SEC RULE 17A-3(A)(6) AND NASD RULE 3110 - RESPONDENTMEMBER FAILED TO ESTABLISH AND MAINTAIN MEMORANDA THATREFLECT THE DATE AND TIME OF ORDER ENTRY FOR INTER-DEALER LIMITORDERS THAT IT RECEIVED FROM OTHER BROKERS AND DEALERS.











Resolution:


Sanction Details: FINED $5,000

Regulator Statement 05-25-00, $5,000 PAID ON 01/18/00, INVOICE #99-MS-1029












Allegations: FOR THE PERIOD MARCH 19, 1998 THROUGH MARCH 20, 1998, THE FIRMFAILED TO ESTABLISH AND MAINTAIN MEMORANDA THAT REFLECT THEDATE AND TIME OF ORDER ENTRY OF INTER-DEALER LIMIT ORDERS THATIT RECEIVED FROM OTHER BROKERS AND DEALERS WHICHCONSTITUTES A VIOLATION OF NASD RULE 3110 AND SEC RULE 17A-3(A)(6)



Resolution:









Sanction Details: PAYMENT OF FINE PENDING INSTRUCTIONS FROM NASD REGULATIONFINANCE DEPARTMENT

Disclosure 69 of 85

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Initiated By: PHILADELPHIA STOCK EXCHANGE


Other



Docket/Case Number: COMPLAINT NO. 89-08



Allegations: ACCEPTED A CUSTOMER ORDER FOR AN OPENING OPTION TRANSACTIONWHICH WAS IN EXCESS OF APPLICABLE POSITION LIMITS



Resolution:

Other Sanctions Ordered: ADOPT PROCEDURES TO ENSURE COMPLIANCE WITH EXCHANGE RULES

Sanction Details: ADOPT PROCEDURES TO ENSURE COMPLIANCE WITH EXCHANGE RULES

Sanctions Ordered:

Settled

Disclosure 70 of 85

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Initiated By: PACIFIC STOCK EXCHANGE


Docket/Case Number: UNKNOWN


Allegations: NET CAPITAL AND GIVE UP RULE VIOLATIONS






https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=89-08








Resolution:


Sanction Details: $2,500.00 PAID - HISTORICAL INFORMATION, DATE PAID UNKNOWN


Settled

Disclosure 71 of 85

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Allegations: WIRE RULE VIOLATIONS



Resolution:


Sanction Details: $50.00 PAID - HISTORICAL INFORMATION, DATE PAID UNKNOWN


Other

Disclosure 72 of 85

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Disclosure 72 of 85










Allegations: OFFSETTING TRADES RULE VIOLATION



Resolution:


Sanction Details: $3,000 PAID - HISTORICAL INFORMATION, DATE PAID UNAVAILABLE


Other

Disclosure 73 of 85

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Allegations: ORDER PRIORITY RULE VIOLATION









Resolution:


Sanction Details: $500.00 PAID - HISTORICAL INFORMATION, DATE PAID UNAVAILABLE


Other

Disclosure 74 of 85

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Allegations: OFFSETTING TRADES RULE VIOLATION



Resolution:


Sanction Details: $2,500.00 PAID - HISTORICAL INFORMATION, DATE PAID UNAVAILABLE


Other

Disclosure 75 of 85

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Allegations: NET CAPITAL VIOLATION







Initiated By: NEW YORK STOCK EXCHANGE


Censure






Allegations: NET CAPITAL VIOLATION


Resolution:


Sanction Details: CENSURE

Sanctions Ordered: Censure

Other

Disclosure 76 of 85

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Docket/Case Number: COMPLAINT NO. N-SE-142



Allegations: EXCESS SPREAD VIOLATION



Resolution: Other








Sanction Details: $250.00 PAID - HISTORICAL INFORMATION, DATE PAID UNAVAILABLE


Disclosure 77 of 85

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LETTER OF CAUTION


Docket/Case Number: COMPLAINT NO. COS 85-49



Allegations: (1) FAILURE TO RETAIN A WRITTEN MEMORANDUM EVIDENCING ATRANSACTION EXECUTED FOR A FIRM ACCOUNT ON JUNE 22, 1983; AND(2) THIS CONDUCT FAILED TO FULFILL THE RECORD RETENTIONREQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934 ANDVIOLATED SECTION 17(A)(1) OF THAT ACT, SEC RULE 17A-4(B)(1) AND PSERULE X, SECTION 17



Resolution:

Other Sanctions Ordered: ISSUANCE OF A LETTER OF CAUTION

Sanction Details: $250.00 FINE PAID - HISTORICAL INFORMATION, DATE PAID UNAVALABLE


Consent

Disclosure 78 of 85

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Allegations: VIOLATION OF, SECTIONS 15(C)(1) AND (2) OF THE EXCHANGE ACT, ANDRULES 15C1-2 AND 15C2-7











Docket/Case Number:



Allegations: VIOLATION OF, SECTIONS 15(C)(1) AND (2) OF THE EXCHANGE ACT, ANDRULES 15C1-2 AND 15C2-7


Resolution:


Sanction Details: CIVIL PENALTY OF $62,500.00 DISGORGEMENT IN THE AMOUNT OF$14,348.00

Regulator Statement [TOP] +02/11/99+ SEC NEWS DIGEST, ISSUE NO. 99-6, DATED 01/11/1999,ENFORCEMENT PROCEEDINGS DISCLOSES; SEC TODAY ANNOUNCED THEINSTITUTION OF ADMINISTRATIVE PROCEEDINGS AGAINST 28 NASDAQMARKET MAKING FIRMS AND 51 INDIVIDUALS ASSOCIATED WITH SUCHFIRMS PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIESEXCHANGE ACT OF 1934 AND, AS TO ONE FIRM, PURSUANT TO SECTION203(K) OF THE INVESTMENT ADVISERS ACT OF 1940. ALL OF THERESPONDENTS CONSENTED, WITHOUT ADMITTING OR DENYING SEC'SFINDINGS, TO THE ENTRY OF ORDERS WHICH IMPOSE CIVIL MONETARYPENALTIES WHICH TOTALED $26,302,500, DISGORGEMENT OF WRONGFULGAINS TOTALING $791,525, SUSPENSIONS OR BARS, CEASE AND DESISTORDERS AND OTHER SANCTIONS. THE ORDERS FOUND THAT THERESPONDENTS HAD ENGAGED PRIMARILY IN ONE OR MORE TYPES OFVIOLATIONS ARISING FROM MARKET MAKING ACTIVITIES IN THE NASDAQSTOCK MARKET. +2/11/99+ SEC ADMINISTRATIVE PROCEEDING FILE NO. 3-9803 DATED 01/11/1999 DISCLOSES; SEC INSTITUTED THESE PUBLICADMINISTRATIVE PROCEEDINGS AGAINST JEFFERIES & COMPANY, INC.,WHICH CONTEMPORANEOUSLY SUBMITTED AN OFFER OF SETTLEMENTTHAT SEC ACCEPTED. SEC FOUND THAT JEFFERIES TRADED NASDAQSTOCKS FOR ITS OWN ACCOUNTS AND FOR THE ACCOUNTS OFINSTITUTIONAL AND RETAIL INVESTORS AND, AS A NASDAQ MARKETMAKER, ENGAGED IN:(1) THE FRAUDULENT COORDINATION OF QUOTEMOVEMENTS; (2) UNDISCLOSED ARRANGEMENTS TO COORDINATEQUOTATIONS; (3) OTHER MARKET MAKER MISCONDUCT; (4) UNLAWFULPROFITS AND OTHER GAINS. IN VIEW OF THE FOREGOING ANDRESPONDENTS' OFFER, IT IS HEREBY ORDERED, PURSUANT TOSECTIONS 15(B) AND 21C OF THE EXCHANGE ACT, THAT: (1) JEFFERIESSHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANYVIOLATION OF, AND COMMITTING OR CAUSING ANY FUTURE VIOLATIONOF, SECTIONS 15(C)(1) AND (2) OF THE EXCHANGE ACT, AND RULES 15C1-2AND 15C2-7 THEREUNDER; (2) SHALL, PAY A CIVIL PENALTY IN THEAMOUNT OF $62,500.00 WITHIN 10 BUSINESS DAYS;(3) SHALL, PAYDISGORGEMENT IN THE AMOUNT OF $14,348.00 WITHIN 10 BUSINESSDAYS.

Sanctions Ordered: Disgorgement/RestitutionCease and Desist/Injunction

Consent






[TOP] +02/11/99+ SEC NEWS DIGEST, ISSUE NO. 99-6, DATED 01/11/1999,ENFORCEMENT PROCEEDINGS DISCLOSES; SEC TODAY ANNOUNCED THEINSTITUTION OF ADMINISTRATIVE PROCEEDINGS AGAINST 28 NASDAQMARKET MAKING FIRMS AND 51 INDIVIDUALS ASSOCIATED WITH SUCHFIRMS PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIESEXCHANGE ACT OF 1934 AND, AS TO ONE FIRM, PURSUANT TO SECTION203(K) OF THE INVESTMENT ADVISERS ACT OF 1940. ALL OF THERESPONDENTS CONSENTED, WITHOUT ADMITTING OR DENYING SEC'SFINDINGS, TO THE ENTRY OF ORDERS WHICH IMPOSE CIVIL MONETARYPENALTIES WHICH TOTALED $26,302,500, DISGORGEMENT OF WRONGFULGAINS TOTALING $791,525, SUSPENSIONS OR BARS, CEASE AND DESISTORDERS AND OTHER SANCTIONS. THE ORDERS FOUND THAT THERESPONDENTS HAD ENGAGED PRIMARILY IN ONE OR MORE TYPES OFVIOLATIONS ARISING FROM MARKET MAKING ACTIVITIES IN THE NASDAQSTOCK MARKET. +2/11/99+ SEC ADMINISTRATIVE PROCEEDING FILE NO. 3-9803 DATED 01/11/1999 DISCLOSES; SEC INSTITUTED THESE PUBLICADMINISTRATIVE PROCEEDINGS AGAINST JEFFERIES & COMPANY, INC.,WHICH CONTEMPORANEOUSLY SUBMITTED AN OFFER OF SETTLEMENTTHAT SEC ACCEPTED. SEC FOUND THAT JEFFERIES TRADED NASDAQSTOCKS FOR ITS OWN ACCOUNTS AND FOR THE ACCOUNTS OFINSTITUTIONAL AND RETAIL INVESTORS AND, AS A NASDAQ MARKETMAKER, ENGAGED IN:(1) THE FRAUDULENT COORDINATION OF QUOTEMOVEMENTS; (2) UNDISCLOSED ARRANGEMENTS TO COORDINATEQUOTATIONS; (3) OTHER MARKET MAKER MISCONDUCT; (4) UNLAWFULPROFITS AND OTHER GAINS. IN VIEW OF THE FOREGOING ANDRESPONDENTS' OFFER, IT IS HEREBY ORDERED, PURSUANT TOSECTIONS 15(B) AND 21C OF THE EXCHANGE ACT, THAT: (1) JEFFERIESSHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANYVIOLATION OF, AND COMMITTING OR CAUSING ANY FUTURE VIOLATIONOF, SECTIONS 15(C)(1) AND (2) OF THE EXCHANGE ACT, AND RULES 15C1-2AND 15C2-7 THEREUNDER; (2) SHALL, PAY A CIVIL PENALTY IN THEAMOUNT OF $62,500.00 WITHIN 10 BUSINESS DAYS;(3) SHALL, PAYDISGORGEMENT IN THE AMOUNT OF $14,348.00 WITHIN 10 BUSINESSDAYS.




Cease and Desist


CIVIL PENALITY DISGORGEMENT


Docket/Case Number: FILE NO. 3-9803



Allegations: THE SEC ENTERED ORDERS FINDING THAT ON JUNE 17 AND JULY 11, 1994,JEFFERIES VIOLATED SECTIONS 15(C)(1) AND (2) OF THE EXCHANGE ACTOF 1934 AND RULES 15C1-2 AND 15C2-7 THEREUNDER IN TWO SECURITIESIN WHICH IT MADE A MARKET ON NASDAQ



Resolution:


Sanction Details: $62,500.00 CIVIL PENALTY, PAID ON 01/11/1999 $14,348 DISGORGEMENT,PAID ON 03/05/1999

Sanctions Ordered: Monetary/Fine $62,500.00Disgorgement/RestitutionCease and Desist/Injunction

Order






Sanction Details: $62,500.00 CIVIL PENALTY, PAID ON 01/11/1999 $14,348 DISGORGEMENT,PAID ON 03/05/1999

Firm Statement THE FIRM AGREED TO RESOLVE THIS MATTER THROUGH THE ENTRY OFTWO ORDERS ISSUED BY THE SEC. WITHOUT ADMITTING OR DENYINGTHE NOTED FINDINGS CONTAINED IN THE ORDERS AND PRIOR TOHEARING OF ANY EVIDENCE, JEFFERIES WAS ORDERED TO CEASE ANDDESIST FROM ENGAGING IN CONDUCT THAT VIOLATES THE NOTED LAWSAND RULES, PAY A $62,500 CIVIL PENALTY AND DISGORGE $14,348

Disclosure 79 of 85

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Docket/Case Number:

Principal Product Type:


Allegations:



Resolution:


Sanction Details:

Regulator Statement LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. CMS980065 AWC.

ON JULY 20, 1998, JEFFERIES & COMPANY, INC. (JEFF) WAS NOTIFIEDTHAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC) ITSUBMITTED WAS ACCEPTED BY NASD REGULATION, INC.'S DEPARTMENTOFENFORCEMENT AND THE NATIONAL ADJUDICATORY COUNCIL. THE AWCALLEGES THAT THE FOLLOWING VIOLATIONS OCCURRED:

JEFF FAILED TO EXECUTE 10 PREFERENCED SELECTNET LIABILITYORDERS WHICH WERE PRESENTED TO JEFF AT JEFF'S PUBLISHED BID ORPUBLISHED OFFER IN AN AMOUNT EQUAL TO OR LESS THAN ITSPUBLISHED QUOTATION SIZE AND, THEREFORE, FAILED TO HONOR ITSPUBLISHED QUOTATION. THIS CONDUCT CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF SEC RULE 11Ac1-1 ("SEC FIRM QUOTERULE"), NASD CONDUCT RULE 3320 AND NASD MARKETPLACE RULE4613(b) ("NASD FIRM QUOTE RULES").

JEFF FAILED TO ESTABLISH ADEQUATE WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHEAPPLICABLE SECURITIES LAWS AND REGULATIONS CONCERNING THESEC'SFIRM QUOTE RULE AND OTHER RELATED RULES.

JEFF WAS CENSURED AND FINED $7,500.








LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. CMS980065 AWC.

ON JULY 20, 1998, JEFFERIES & COMPANY, INC. (JEFF) WAS NOTIFIEDTHAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC) ITSUBMITTED WAS ACCEPTED BY NASD REGULATION, INC.'S DEPARTMENTOFENFORCEMENT AND THE NATIONAL ADJUDICATORY COUNCIL. THE AWCALLEGES THAT THE FOLLOWING VIOLATIONS OCCURRED:

JEFF FAILED TO EXECUTE 10 PREFERENCED SELECTNET LIABILITYORDERS WHICH WERE PRESENTED TO JEFF AT JEFF'S PUBLISHED BID ORPUBLISHED OFFER IN AN AMOUNT EQUAL TO OR LESS THAN ITSPUBLISHED QUOTATION SIZE AND, THEREFORE, FAILED TO HONOR ITSPUBLISHED QUOTATION. THIS CONDUCT CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF SEC RULE 11Ac1-1 ("SEC FIRM QUOTERULE"), NASD CONDUCT RULE 3320 AND NASD MARKETPLACE RULE4613(b) ("NASD FIRM QUOTE RULES").

JEFF FAILED TO ESTABLISH ADEQUATE WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHEAPPLICABLE SECURITIES LAWS AND REGULATIONS CONCERNING THESEC'SFIRM QUOTE RULE AND OTHER RELATED RULES.

JEFF WAS CENSURED AND FINED $7,500.




Censure


$7,500.00 FINE


Docket/Case Number: CONSENT NO. CMS 980065 AWC



Allegations: NASD ALLEGED IN TEN INSTANCES OVER THE COURSE OF TWO YEARSAND TEN MONTHS FROM MARCH 1994 TO DECEMBER 1996, JEFFERIESFAILED TO HONOR ITS PUBLISHED QUOTATION AND FAILED TO ESTABLISHADEQUATE WRITTEN SUPERVISORY PROCEDURES



Resolution:









Sanction Details: $7,500 PAID ON 08/26/1998

Firm Statement JEFFERIES & COMPANY, INC. ACCEPTED, WITHOUT ADMITTING ORDENYING THE ALLEGED VIOLATIONS, THE ENTRY OF THE FINDINGS BYNASD REGULATION, INC. ADDITIONALLY, JEFFERIES CONSENTED TO ACENSURE AND FINE OF $7,500


Disclosure 80 of 85

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Docket/Case Number: N-V-57



Allegations:



Resolution:


Sanction Details:

Regulator Statement NASDAQ COMPLAINT N-V-57 FILED 2-24-725/2/72: FINED $25.005/17/72: PAID FINE6/16/72: FINAL


Decision

iReporting Source:












Docket/Case Number: COMPLAINT N-V-57



Allegations: HISTORICAL INFORMATION, FURTHER INFORMATION UNAVAILABLE



Resolution:


Sanction Details: $25.00 PAID ON 05/17/1972

Firm Statement FINED ON 05/02/1972. FINE PAID ON 05/17/1972. THE MATTER BECAMEFINAL ON 06/16/1972


Settled

Disclosure 81 of 85

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Allegations:









Resolution:


Sanction Details:

Regulator Statement MARKET SURVEILLANCE COMMITTEE COMPLAINT #CMS920023 AWC (A)LETTER OF ACCEPTANCE, WAIVER AND CONSENT FILED FEBRUARY 11,1992 AGAINST RESPONDENT MEMBER JEFFERIES & COMPANY,INC.ALLEGING VIOLATIONS OF PART VI, SECTION 5(a) OF SCHEDULE D INTHAT THE FOLLOWING RESPONDENTS FAILED TO REPORT THEIR NASDAQVOLUME:

THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT WAS ACCEPTED BYTHE MARKET SURVEILLANCE COMMITTEE ON MARCH 18, 1992 AND BY THENATIONAL BUSINESS CONDUCT COMMITTEE ON APRIL 7, 1992. ***$750.00 FINE*** ***$750.00 PAID ON 4/28/92 INVOICE #92-MS-401***


Consent







Docket/Case Number: CMS 920023 AWC



Allegations: FAILURE TO REPORT NASDAQ VOLUME IN ONE SECURITY ON TWO DATES:11/12/1991 AND 12/02/1991













Disclosure 82 of 85

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Allegations:



Resolution:


Sanction Details:

Regulator Statement MARKET SURVEILLANCE COMMITTEE COMPLAINT #CMS910190 AWC (A):LETTER OF ACCEPTANCE: WAIVER AND CONSENT FILED DECEMBER 4,1991AGAINST RESPONDENT MEMBER JEFFERIES & COMPANY, INC. ALLEGINGVIOLATIONS OF PART VI, SECTION 5(a) OF SCHEDULE D IN THATRESPONDENTS FAILED TO REPORT THEIR NASDAQ VOLUME:

THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT WAS ACCEPTED BYTHE MARKET SURVEILLANCE COMMITTEE ON FEBRUARY 20, 1992 AND BYTHE NATIONAL BUSINESS CONDUCT COMMITTEE ON MARCH 6, 1992. ***$250.00 FINED*** ***$250.00 PAID ON 3/24/92 INVOICE #92-MS-307***


Consent






MARKET SURVEILLANCE COMMITTEE COMPLAINT #CMS910190 AWC (A):LETTER OF ACCEPTANCE: WAIVER AND CONSENT FILED DECEMBER 4,1991AGAINST RESPONDENT MEMBER JEFFERIES & COMPANY, INC. ALLEGINGVIOLATIONS OF PART VI, SECTION 5(a) OF SCHEDULE D IN THATRESPONDENTS FAILED TO REPORT THEIR NASDAQ VOLUME:

THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT WAS ACCEPTED BYTHE MARKET SURVEILLANCE COMMITTEE ON FEBRUARY 20, 1992 AND BYTHE NATIONAL BUSINESS CONDUCT COMMITTEE ON MARCH 6, 1992. ***$250.00 FINED*** ***$250.00 PAID ON 3/24/92 INVOICE #92-MS-307***







Docket/Case Number: CMS 910190 AWC



Allegations: FAILURE TO REPORT VOLUME IN A NASDAQ SECURITY



Resolution:


Sanction Details: $250.00 PAID ON 03/24/1992



Disclosure 83 of 85

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Docket/Case Number:



Allegations: THE SEC INSTITUTED ADMINISTRATIVE PROCEEDINGS AGAINST BOYD L.JEFFERIES AND JEFFERIES & CO., INC. UNDER SECTIONS 15(B)(6) OF THESECURITIES EXCHANGE ACT OF 1934.











Resolution:


Sanction Details: SIMULTANEOUSLY, JEFFERIES & CO. AND JEFFERIES SUBMITTED OFFERSOF SETTLEMENT CONSENTING TO AN ORDER. THE SEC ORDERED THATJEFFERIES & CO. BE CENSURED

Regulator Statement [TOP] ***4/6/87: SEC NEWS DIGEST ISSUE 87-51, DATED 3/20/87ADMINISTRATIVE PROCEEDINGS: THE SEC INSTITUTED ADMINISTRATIVEPROCEEDINGS AGAINST BOYD L. JEFFERIES AND JEFFERIES & CO., INC.UNDER SECTIONS 15(B)(6) OF THE SECURITIES EXCHANGE ACT OF 1934.SIMULTANEOUSLY, JEFFERIES & CO. AND JEFFERIES SUBMITTED OFFERSOF SETTLEMENT CONSENTING TO AN ORDER. THE SEC ORDERED THATJEFFERIES & CO. BE CENSURED (REL. 34-25572) *** 4/29/88-SEC NEWSDIGEST ISSUE 88-73 DATED 4/18/88 DISCLOSES: THE SEC ORDERED THATTHE ORDER INSTITUTING PROCEEDING UNDER SECTIONS 15(B)(4) AND (6)OF THE SECURITIES EXCHANGE ACT OF 1934 AGAINST JEFFERIES &COMPANY, INC. AND BOYD L. JEFFERIES, ENTERED ON 3/19/87, BEMODIFIED, AS NECESSARY, TO ALLOW JEFFERIES & CO. UNTIL 6/1/88 TOSUBMIT THE AFFIDAVIT OF COMPLIANCE REQUIRED BY THE ORDER.RESPONDENTS CONSENTED TO THE ORDER WITHOUT ADMITTING ORDENYING THE ALLEGATIONS CONTAINED THEREIN. THE ORDER, AMONGOTHER THINGS, REQUIRED JEFFERIES & CO. TO COMPLY WITH THEUNDERTAKINGS CONTAINED IN ITS OFFER OF SETTLEMENT. JEFFERIES &CO. UNDERTOOK, AMONG OTHER THINGS, TO SUBMIT TO THE SEC AREPORT AND RECOMMENDATIONS OF AN OUTSIDE CONSULTANT, AND ANAFFIDAVIT SETTING FORTH THE DETAILS OF ITS IMPLEMENTATION OF THERECOMMENDATIONS CONTAINED IN THE REPORT. JEFFERIES & CO.,THROUGH ITS COUNSEL, HAS REQUESTED THAT THE TIME ALLOWED FORTHE SUBMISSION OF ITS AFFIDAVIT TO THE SEC BE EXTENTED UNTIL7/1/88. THE SEC DETERMINED THAT IT IS APPROPRIATE TO GRANTJEFFERIES & CO.'S REQUEST . (REL. 34-25572) *** 9/27/89-SEC NEWSDIGEST ISSUE 89-173, DATED 9/11/89 DISCLOSES: THE SEC ORDEREDTHAT THE ORDER INSTITUTING PROCEEDINGS AGAINST JEFFERIES &COMPANY, INC. AND BOYD L. JEFFERIES, ENTERED ON 3/10/87, BEMODIFIED TO ALLOW JEFFERIES & CO. UNTIL SEPTEMBER 15 TO SUBMITTHE REPORT OF AN OUTSIDE REVIEWER REQUIRED BY THE ORDER (REL.34-27206)

Sanctions Ordered: Censure

Consent






[TOP] ***4/6/87: SEC NEWS DIGEST ISSUE 87-51, DATED 3/20/87ADMINISTRATIVE PROCEEDINGS: THE SEC INSTITUTED ADMINISTRATIVEPROCEEDINGS AGAINST BOYD L. JEFFERIES AND JEFFERIES & CO., INC.UNDER SECTIONS 15(B)(6) OF THE SECURITIES EXCHANGE ACT OF 1934.SIMULTANEOUSLY, JEFFERIES & CO. AND JEFFERIES SUBMITTED OFFERSOF SETTLEMENT CONSENTING TO AN ORDER. THE SEC ORDERED THATJEFFERIES & CO. BE CENSURED (REL. 34-25572) *** 4/29/88-SEC NEWSDIGEST ISSUE 88-73 DATED 4/18/88 DISCLOSES: THE SEC ORDERED THATTHE ORDER INSTITUTING PROCEEDING UNDER SECTIONS 15(B)(4) AND (6)OF THE SECURITIES EXCHANGE ACT OF 1934 AGAINST JEFFERIES &COMPANY, INC. AND BOYD L. JEFFERIES, ENTERED ON 3/19/87, BEMODIFIED, AS NECESSARY, TO ALLOW JEFFERIES & CO. UNTIL 6/1/88 TOSUBMIT THE AFFIDAVIT OF COMPLIANCE REQUIRED BY THE ORDER.RESPONDENTS CONSENTED TO THE ORDER WITHOUT ADMITTING ORDENYING THE ALLEGATIONS CONTAINED THEREIN. THE ORDER, AMONGOTHER THINGS, REQUIRED JEFFERIES & CO. TO COMPLY WITH THEUNDERTAKINGS CONTAINED IN ITS OFFER OF SETTLEMENT. JEFFERIES &CO. UNDERTOOK, AMONG OTHER THINGS, TO SUBMIT TO THE SEC AREPORT AND RECOMMENDATIONS OF AN OUTSIDE CONSULTANT, AND ANAFFIDAVIT SETTING FORTH THE DETAILS OF ITS IMPLEMENTATION OF THERECOMMENDATIONS CONTAINED IN THE REPORT. JEFFERIES & CO.,THROUGH ITS COUNSEL, HAS REQUESTED THAT THE TIME ALLOWED FORTHE SUBMISSION OF ITS AFFIDAVIT TO THE SEC BE EXTENTED UNTIL7/1/88. THE SEC DETERMINED THAT IT IS APPROPRIATE TO GRANTJEFFERIES & CO.'S REQUEST . (REL. 34-25572) *** 9/27/89-SEC NEWSDIGEST ISSUE 89-173, DATED 9/11/89 DISCLOSES: THE SEC ORDEREDTHAT THE ORDER INSTITUTING PROCEEDINGS AGAINST JEFFERIES &COMPANY, INC. AND BOYD L. JEFFERIES, ENTERED ON 3/10/87, BEMODIFIED TO ALLOW JEFFERIES & CO. UNTIL SEPTEMBER 15 TO SUBMITTHE REPORT OF AN OUTSIDE REVIEWER REQUIRED BY THE ORDER (REL.34-27206)




Injunction


CENSURE UNDERTAKING


Docket/Case Number: 87 CIV. 1804(USDC SDNY)



Allegations: VIOLATED OR AIDED AND ABETTED VIOLATIONS OF THE ANTI-FRAUD,BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS AND MARGINREQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934



Resolution:


Sanction Details: PERMANENT INJUNCTION ENJOINING VIOLATION OF OR AIDING ANDABETTING VIOLATIONS OF THE ANTI-FRAUD, BENEFICIAL OWNERSHIPREPORTING REQUIREMENTS AND MARGIN REQUIREMENTS OF THESECURITIES EXCHANGE ACT OF 1934

Firm Statement WITHOUT ADMITTING OR DENYING ANY OF THE ALLEGATIONS JEFFERIES& COMPANY, INC. CONSENTED TO THE ENTRY OF A FINAL JUDGMENT OFPERMANENT INJUNCTION, WAS CENSURED AND WAS REQUIRED TOCOMPLY WITH CERTAIN UNDERTAKINGS

Sanctions Ordered: CensureCease and Desist/Injunction

Consent

Disclosure 84 of 85

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Docket/Case Number: N-V-117



Allegations:


Resolution:


Sanction Details:

Regulator Statement NASDAQ COMPLAINT N-V-117 FILED 3/29/727-10-72: FINED $1007-20-72: PAID FINE8-24-72: FINAL


Decision







Docket/Case Number: COMPLAINT N-V-117



Allegations: HISTORICAL INFORMATION, FURTHER INFORMATION UNAVAILABLE









Resolution:


Sanction Details: $100.00 PAID 07/20/1972

Firm Statement FINED $100.00 ON 07/10/1972. THE FINE WAS PAID ON 07/20/1972. THEMATTER BECAME FINAL ON 08/24/1972


Settled

Disclosure 85 of 85

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Docket/Case Number: A-431



Allegations:



Resolution:


Sanction Details:

Regulator Statement COMPLAINT #A-431 FILED 09/17/71DECISION 03/28/72: CENSUREDFINED $5,000ASSESSED $50.TO BE FINAL 05/12/72 FINALFINES & COSTS F&C NOT PAIDFINE PD. 04/21/72


Decision






COMPLAINT #A-431 FILED 09/17/71DECISION 03/28/72: CENSUREDFINED $5,000ASSESSED $50.TO BE FINAL 05/12/72 FINALFINES & COSTS F&C NOT PAIDFINE PD. 04/21/72




Censure


FINE ASSESSMENT


Docket/Case Number: COMPLAINT NO. A-431



Allegations: LACK OF WRITTEN SUPERVISORY PROCEDURES AND REGISTRATION OFPERSONNEL



Resolution:


Sanction Details: $5,000.00 FINE PAID ON 04/21/1972. $50.00 ASSESSMENT PAID ON04/21/1972


Settled






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 4


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

NASD

01/06/2006

06-00052

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE

$1,800,000.00

AWARD AGAINST PARTY

12/29/2006

$1,207,075.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 4

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


FINRA

12/10/2009

09-06138

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCE

AUCTION RATE SECURITIES187©2020 FINRA. All rights reserved. Report about JEFFERIES LLC




www.finra.org/awardsonline






Disposition:

Disposition Date:


AUCTION RATE SECURITIES

$8,610,000.00

AWARD AGAINST PARTY

05/07/2012

$1,824,121.00


Disclosure 3 of 4

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

08/12/2011

11-02937

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-OTHER


$665,600,000.00

AWARD AGAINST PARTY

07/01/2013

$566,666.68


Disclosure 4 of 4

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

FINRA

06/05/2012

12-01693

ACCOUNT RELATED-BREACH OF CONTRACT








Case Number:



Disposition:

Disposition Date:


12-01693


$16,000,000.01

AWARD AGAINST PARTY

09/16/2013

$7,000,000.00








End of Report

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