First NY Securities Fined $400,000 | Cold Spring Advisory Group

First NY Securities Fined $400,000

April 20, 2015

First New York Securities L.L.C., located on Park Avenue in New York City was fined $400,000 and ordered to revise its supervisory procedures and internal controls to detect insider trading by its registered stockbrokers. The firm submitted a letter of acceptance, waiver and consent (AWC) to the Financial Industry Regulatory Authority (FINRA) to findings that it did not have a system in place to review trading accounts for insider trading or to detect red flags that could be indications of insider trading such as high volumes of trading before a news announcement.

Although First New York Securities' written supervisory procedures (WSPS) did forbid the practice of insider trading, it did not contain procedures regarding which accounts would be reviewed and how often the reviews should take place. FINRA also found the firm's procedures for the electronic surveillance system it used did not state whose electronic communications would be reviewed and or the timing of reviews, and that the system itself was inadequate because it could not search emails and instant messages using keywords.