Skip to content

FINRA Fines RBC Capital Markets Nearly $800K for Inaccurate Trade Confirmations

The Financial Industry Regulatory Authority (FINRA) has fined RBC Capital Markets and ordered restitution for its actions related to inaccurate trade confirmations and related matters. The violations highlight the importance of accurate trade confirmations in maintaining investor trust and transparency.

Trade confirmations play a crucial role in protecting investors who buy or sell securities through broker-dealers. They alert investors to potential conflicts of interest and allow them to verify transaction terms, evaluate costs, and assess execution quality.

RBC submitted a letter of acceptance, waiver, and consent to FINRA to propose a settlement of the following alleged rule violations.

Inaccurate trade confirmations: RBC sent approximately 940,000 trade confirmations to customers containing inaccurate information between 2010 and 2019. Additionally, they failed to send millions of trade confirmations to customers during the period from 2006 to 2023.

This was in direct violation of Rule 10b-10 within the Securities Exchange Act of 1934, which mandates broker-dealers to provide customers with confirmations disclosing essential transaction details. Similarly, FINRA Rule 2232(a) requires written confirmations conforming to Exchange Act Rule 10b-10.

After a customer raised questions about a confirmation in 2017, RBC identified the coding errors and remedied them.

Although the U.S. Securities and Exchange Commission trading and markets division, in a 2006 No-Action Letter, allowed broker-dealers not to send trade-by-trade confirmations for automatic dividend reinvestments to DRIP participants, specific conditions must be met.

Violation of Regulation T: Also, RBC served as the clearing broker for certain RBC customer accounts and for certain introducing brokers with cash accounts from 2012 to 2016. RBC extended credit to certain customers and introducing firms in violation of Regulation T. This action violated Rule 2010, which requires firms to adhere to high standards of commercial honor and equitable trade principles.

RBC was censured by FINRA and ordered to pay a $375,000 fine and $393,834 in restitution to affected customers. The AWC was submitted on the condition that, if accepted, FINRA will not bring future actions against RBC alleging violations based on these same factual findings.

Headquartered in New York, RBC conducts a general securities business, self-clearing securities transactions for its own customers and clearing securities transactions for customers of its introducing broker-dealers. The firm employs approximately 6,000 registered representatives across 322 branches.

Click here to visit The DI Wire directory page.