FINRA 'discipline' Alert: From June 1997 - June 2023, Pershing failed to report millions of fractional share trades to the FINRA/Nasdaq Trade Reporting Facility, the Over-the-Counter Reporting Facility, and their predecessor.

FINRA has made public that Pershing LLC failed to report millions of fractional share trades over a span of more than two decades. From June 1997 to June 2023, Pershing did not report these trades to the FINRA Trade Reporting Facility (FNTRF) or Over-the-Counter Reporting Facility (ORF), resulting in unpaid regulatory transaction fees. Notice how FINRA only seems to be upset that they did not get their 'cut', not that folks who made fractional sales were getting screwed?

Facts and Violative Conduct:

• Pershing failed to report millions of fractional share trades executed in a principal capacity with customers. During a sample period from June 2012 to June 2023 alone, over five million fractional share trades went unreported.
• Pershing's actions violated FINRA Rules 6380A, 6622, and 2010, as well as NASD Rules 4632, 4642, 6420, 6620, and 2110. These rules mandate the reporting of trades and require members to observe 'high standards of commercial honor.'
• The failure to report these trades compromised the accuracy of public information and FINRA’s surveillance capabilities, essential for safeguarding market integrity and protecting investors.
• From June 1997 through June 2023, Pershing did not have a supervisory system in place to ensure compliance with reporting rules for fractional share trades.
  • Although a supervisory framework was devised in July 2022, it was not implemented until June 2023.

Punishment?:

How could this impact GameStop?:

Given the high-profile nature of GameStop and the concerns about naked short selling and other illegal market manipulation, Pershing's failure to report trades heightens suspicions of 'fuckery' as those unreported fractional share trades could have contributed to or masked manipulative trading practices and exacerbating volatility.

If fractional share trading and reporting are compromised, it could affect how corporate actions like stock splits, dividends, or buybacks are perceived and executed. For folks utilizing Pershing to DRS their shares, how badly have costs basis screwed up because Pershing did not properly account for fractionals?

Reviewing the Statement of Financial Condition they published for year end 2020 and 2019:

https://www.pershing.com/_global-assets/pdf/pershing-llc-sofc-december-2020-audited.pdf

https://www.pershing.com/_global-assets/pdf/pershing-llc-sofc-december-2019-audited.pdf

Going back to the 'Brazil Puts', those are supposedly with BNY Mellon who is Citadel's clearing house. BNY Mellon is Pershing LLC and are now caught failing to to report millions of fractional share trades, interesting...

TLDRS:

• Pershing LLC failed to report millions of fractional share trades to the FINRA Trade Reporting Facility (FNTRF) and Over-the-Counter Reporting Facility (ORF) from June 1997 to June 2023.
• The unreported trades compromised the accuracy of public information and FINRA’s surveillance capabilities, which are crucial for maintaining market integrity and protecting investors.
• Pershing lacked a supervisory system to ensure compliance with reporting rules for fractional share trades until June 2023, despite devising a framework in July 2022.
• Without admitting fault, Pershing was censured, fined $175,000, and required to pay the overdue transaction fees.
  • Notice how FINRA only seems to care they did not get there cut?!!?
• Pershing's failure to report fractional transactions furhter heightens suspicions of market 'fuckery' and GameStop.
• The unreported fractional share trades could affect corporate actions like stock splits, dividends, or buybacks, and potentially distort the cost basis for shareholders using Pershing's services, including those engaging in Direct Registration System (DRS) transactions before DRSing to Computershare?