The Financial Industry Regulatory Authority (FINRA) of US has censured and fined New York-based Trillium Brokerage Services $1m for using an illicit high frequency trading strategy and related supervisory failures.
According to FINRA, Trillium, through nine proprietary traders, entered numerous layered, non-bona fide market moving orders to generate selling or buying interest in specific stocks.
By entering the non-bona fide orders, often in substantial size relative to a stock’s overall legitimate pending order volume, Trillium traders created a false appearance of buy- or sell-side pressure.
FINRA’s investigation found that nine Trillium proprietary traders intentionally created the appearance of substantial selling or buying interest in the Nasdaq Stock Market and NYSE Arca exchange.
Trillium’s traders bought and sold Nasdaq securities in this manner in over 46,000 instances, resulting in total profits of approximately $575,000, of which the firm retained over $173,000 and subsequently was required to disgorge.
In addition to the nine traders, FINRA also took action against Trillium’s director of trading and its chief compliance officer.