NASD determined that representatives of Advantage Trading created false order tickets in response to an NASD request for information. The false order tickets were provided to NASD and identified as the firm's official records. The firm subsequently provided a second set of order tickets with different information on the same transactions. In subsequent correspondence and during sworn testimony, representatives of Advantage consistently maintained that the original order tickets were generated directly from the firm's computer system when, in fact, the order tickets were created after the receipt of NASD's inquiry letters.
The two sets of records were inconsistent with the information reported by Advantage to the Automated Confirmation Transaction Service (ACT). Consequently, the regulatory audit trail was adversely affected. The investigation further revealed that Advantage failed to properly maintain the necessary records and record electronic information in a non-erasable, non-rewritable format.
NASD also determined that Epps oversaw the production of the false order tickets and provided inaccurate and misleading testimony to NASD on two separate occasions. Epps was also the designated supervisor responsible for the underlying trade reporting violations.
Under NASD rules, the individuals and firms named in a complaint can file a response and request a hearing before an NASD disciplinary panel. Possible sanctions include a fine, order to pay restitution, censure, suspension, or bar from the securities industry.
Investors can obtain more information and the disciplinary record of any NASD-registered broker or brokerage firm by calling NASD's BrokerCheck. NASD makes available BrokerCheck at no charge to the public. In 2003, members of the public used this service to conduct more than 2.9 million searches for existing brokers or firms and requested almost 180,000 reports in cases where disclosable information existed on a broker or firm. Investors can link directly to the program by going online to www.nasdbrokercheck.com. Investors can also continue to access this service by calling 1-800-289-9999.
NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business-from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit our Web Site at www.nasd.com.
