Securities Industry Commentator by Bill Singer Esq

Wunderlich Files Motion to Vacate FINRA Arbitration Citing Zoom Hearing

Wunderlich Securities, Inc. and Gary Wunderlich, Petitioners, v. Dominick & Dickerman, LLC and Michael J. Campbell, Respondents (Petition to Vacate Arbitration Award, United States District Court for the Southern District of New York)

Brokerage Firm Sues Compliance Services Provider Over FINRA Sanctions.

Triton Pacific Securities, LLC, Plaintiff/Counterclaim Defendant v. Mission Critical Services Corp., Defendant/Counterclaim Plaintiff/Third-Party Plaintiff, v. Triton Pacific Adviser, LLC, Triton Pacific Investment Corporation, Inc., Triton Pacific Capitol Partners, LLC, Triton Pacific Investment Group, LLC, Craig J. Faggen, Michale L. Carroll, Brian D. Buehler, and Wendy Poole, Third-Party Defendants (Opinion and Order, SDNY)

SEC Charges Bloomberg Tradebook for Order Routing Misrepresentations (SEC Release)

Layoffs Start Turning From Temporary to Permanent Across America (Bloomberg by Shawn Donnan and Joe Deaux)

Instacart's Frantic Dash From Grocery App to Essential Service / The grocery delivery startup added 300,000 workers in eight weeks, but Covid-19 is still overtaking it in more ways than one. (Bloomberg by Ellen Huet and Lizette Chapman)

[In]Securities Guest Blog: Marconi Plays the Mamba by Aegis Frumento Esq (BrokeAndBroker.com Blog)

SEC Files Charges in International Ponzi Scheme (SEC Release)

SEC Directs Equity Exchanges and Financial Industry Regulatory Authority to Improve Governance of Market Data Plans (SEC Release)

Statement on Order to Modernize the Governance Structure of National Market System Plans for Equity Market Data (Statement by SEC Chair Jay Clayton)

Statement on Final Order Directing the Creation of a New Plan for Consolidated Equity Market Data (Statement by Commissioner Allison Herren Lee)

Statement at Open Meeting Considering Commission Order Addressing Equity Market Data Plan (Statement by Commissioner Elad L. Roisman)

Statement on Equity Market Data Governance Reforms (Statement by Commissioner Hester M. Peirce)

8. The FINRA Arbitration was held on December 17-19, 2019, and March 3-6, 10, and 12, 2020, before three arbitrators (the "Panel"): Chairman A. Rene Hollyer, Jr.,Professor Jill Gross, and Mr. Joel Finard. Pursuant to an agreement between counsel, all the hearings, except March 12, 2020, were held at the offices of Dominick's counsel in New York City. On the consent of counsel for both sides and the Panel, the March 12, 2020 hearing was held virtually via Zoom video conference, with counsel for the parties and the Panel at different locations due to concerns over the COVID-19 pandemic. 

. . .

42. During the last day of the Arbitration, March 12, 2020, the proceedings were held via Zoom videoconference due to concerns over the COVID-19 outbreak. Once again, the Panel was inattentive, with Arbitrator Finard looking at other screens, typing, and eating during the course of the presentation. Arbitrator Gross even blocked her screen during the hearing, preventing the parties from confirming that she was even participating. And at one point during closing arguments for WSI and Mr. Wunderlich, Chairman Hollyer walked away from his screen. The presentation resumed once Chairman Hollyer returned to his screen. (Tr. 2358-2359.) 

FINRA Baseball Caps, Rice Krispies Treats, Hiring Spree, And ZOOM OTRs  (BrokeAndBroker.com Blog / May 1, 2020)

http://www.brokeandbroker.com/5197/FINRA-Zoom-OTR/

Guest Blog: Riddle Of The FINRA Sphinx By Stephen Kohn (BrokeAndBroker.com Guest Blog /  April 22, 2020)

http://www.brokeandbroker.com/5183/guest-blog-stephen-kohn/

For the foregoing reasons, the Court grants partial summary judgment to Triton and dismisses MCS's sole Amended Counterclaim. The Court further grants summary judgment to the third-party defendants and dismisses MCS's Third-Party Complaint. Finally, because the Court has dismissed the Third-Party Complaint, the following third-party defendants are also dismissed: Triton Pacific Adviser, LLC; Triton Pacific Investment Corporation, Inc.; Triton Pacific Capitol Partners, LLC; Triton Pacific Investment Group, LLC; Craig Faggen; Michael Carroll; Brian Buehler; and Wendy Poole. 

This litigation will now proceed on Triton's First Amended Complaint. The parties have already engaged in discovery and a case management conference is currently scheduled for June 19, 2020 at 11 a.m. See Dkt. 43. In light of the current public health crisis, that conference will take place telephonically on the date and time scheduled. The Court will provide the parties with dial-in information for the conference the week prior. 

The Clerk of Court is respectfully directed to terminate the motions pending at dockets 28 and 37 and dismiss the defendants specified above.

[T]radebook routed certain customer orders - primarily orders entered by customers who paid relatively low commission rates - using an undisclosed arrangement that it referred to internally as the "Low Cost Router."  As part of this arrangement, Tradebook allowed three unaffiliated broker-dealers to determine the venues to which certain customer "immediate-or-cancel" orders would be routed for execution. Tradebook did not inform affected customers that a significant portion of their orders would be routed by an unaffiliated broker-dealer instead of by Tradebook. Between November 2010 and September 2018, approximately 6.4 million Tradebook customer orders were executed based on routing decisions made by these unaffiliated broker-dealers. This practice contradicted Tradebook's marketing materials, which represented that customer orders would be routed by Tradebook's own "advanced" technology, based on factors such as price and liquidity. Additionally, Tradebook provided unverifiable execution venue information to customers for more than a million orders routed using the Low Cost Router.

worrying trend emerging from the stacks of layoff notices filed by businesses in California, Florida, and New York, where service industries have been hammered by lockdown orders, as well as politically important swing states such as Michigan and Ohio, where key industries such as steel and autos already faced headwinds going into 2020. Plenty of layoffs that just a month ago were labeled "temporary" are now tagged "indefinite" or "permanent." Alongside announcements of sweeping staff cuts by major employers such as Boeing Co. and U.S. Steel Corp. and the accelerating pace of downsizing in brick-and-mortar retailing, such notices are a sign that even as businesses continue to hope for a speedy recovery, they are starting to plan for a slow one.

Some shoppers say that as their risks of exposure to Covid-19 have increased, they've received less support from Instacart than they did before the pandemic. The app crashes constantly, they say, and the help desk is overwhelmed, even after expanding from a staff of 1,200 to more than 18,000. Shopper Jennell Lévêque says it took her 12 hours to get a response to a question about an order, by which point she couldn't complete the job. In late March the company said its procurement team had secured a supply of hand sanitizer from a manufacturer in Louisiana. Lévêque ordered a 6-oz. bottle, but it took two weeks to arrive, and by then had popped open and leaked into its cardboard box. Instead, she used sanitizer she ordered from DoorDash and Caviar, the meal delivery services, as part of her work for them. Instacart says shoppers using its chat tool now average no more than 30 seconds waiting for a response and customer support generally is "back to pre-Covid levels."

The Commission's order directs the equity exchanges and FINRA to submit a New Consolidated Data Plan within 90 days that includes specific governance provisions that the Commission believes will enable the plan to address concerns that have been raised about the governance of the existing Equity Data Plans and the provision of equity market data to market participants.

Following receipt of the New Consolidated Data Plan, the Commission will notice the plan for public comment. After considering any comments received on the New Consolidated Data Plan, the Commission will consider whether to approve the New Consolidated Data Plan with any changes or subject to such conditions as the Commission may deem necessary or appropriate. Until a New Consolidated Data Plan has been approved by the Commission, the current Equity Data Plans will continue to govern the collection, processing, and dissemination of equity market data.

Finally, there is one broader point I would like to address.  Some commenters asked about the relationship between this effort to improve the governance structure for consolidated data and the Commission's proposed rulemaking on Market Data Infrastructure. I want to be clear that the two efforts address distinct aspects related to the provision of consolidated equity market data.  Today's Order speaks to the governance structure for consolidated market data and is designed to ensure that conflicts of interest in NMS plan governance are appropriately managed, including by providing for broader representation on the new NMS plan's operating committee.  The Market Data Infrastructure proposal, by contrast, addresses the operational structure of the securities information processors ("SIPs")-including the content of SIP data products and the method by which NMS stock information is collected, consolidated, and disseminated.

I am pleased to support the staff's recommendation to require the equities exchanges and FINRA to propose a new, single NMS plan regarding consolidated equity market data.  I encourage the equities exchanges and FINRA to take up this task with purpose and commitment-the issues that need to be addressed and the path forward are well understood.  The time for investor and market-focused action has arrived.  Finally, and with respect, I also want to thank the staff who have carefully considered the comments received and worked tirelessly to prepare the Order.  Particularly during this Public Service Recognition Week, I want to commend the staff for its hard work, dedication, and thoughtfulness on this matter and every other, today and every day.

When this Order was proposed in January, I expressed my concern that the governance changes, standing alone, may prove insufficient to address aspects of this fundamental conflict because the new voting members would lack the voting power, and may lack the incentives, to affirmatively usher in needed reforms. Reforms related to, for example, the content and speed of the SIPs, conflicts disclosure and management, confidentiality with respect to SIP customer data, and fee transparency. I also expressed concern that a protracted, piece-by-piece approach may never yield the full package of needed reforms.

Because of the persistence of this fundamental conflict, I remain concerned and am committed to careful monitoring of the ultimate timing and efficacy of needed reforms, including those in today's governance order. With that said, however, it is clear that the Commission has made significant headway on numerous fronts toward improving the public market data streams. 

[I] find it difficult to discuss concerns with these plans without also talking about the proprietary data feeds provided by exchanges.  As I noted at the time of the proposed order, "I do see a role for the SEC to address the potential for the proprietary feeds to be the supply that meets that demand [for market data] to the detriment of the purpose of the [Securities Information Processors ("SIPs")] and under a governance structure where conflicts of interest exist." While there will be further work to establish the New Consolidated Data Plan that we are ordering today, I believe that today's action will ultimately improve the operation of the SIPs by promoting efficiencies, mitigating conflicts, and ensuring a broader base of input into the decision-making process. 

I appreciate the feedback we received on the proposed order during the comment period.  While some questioned our proposal and whether it was necessary, others asserted that we had not gone far enough.  After careful consideration, I believe we strike the right balance today in recognizing the regulatory responsibilities required of the self-regulatory organizations in operating an NMS plan while acknowledging market participants' concerns with the current structure. 

As I expected, commenters had strongly-held and widely divergent views about whether to proceed with these reforms and, if so, how.  In light of these comments and after further consideration of the challenges users face with respect to the consolidated data feed, I have concluded that reforms to the consolidated market plan are appropriate.  Given the contentious nature of the issues, it is also appropriate for the order to establish parameters that should guide the plan participants in developing a new consolidated equity market data plan.  In particular, requiring that participants consolidate the three data plans into a single new plan should make distributing market data more efficient, eliminate duplicative costs, and streamline compliance and oversight.  Moreover, adding new voices to the operating committee should help increase transparency and accountability to the market as a whole.  Together with the conflicts and confidentiality amendments that the Commission approved earlier today, this order represents a significant, if incremental, step in improving our system for distributing market data.

• Securities Industry Commentator
• Bill Singer