VIRTU Americas LLC
History Of VIRTU Americas LLC
VIRTU Americas LLC (f/k/a KCG Americas LLC and Knight Capital Americas LLC)
has been a FINRA member since July 22, 2009.1 Headquartered in New York, the firm
primarily engages in market-making, provides electronic execution services, and operates
an SEC-registered Alternative Trading System (ATS) that matches orders in the National
Market System securities.
As of October 2020, the firm employed 346 registered individuals in seven branch offices.
On December 17, 2015, FINRA accepted AWC No. 2013037816601 from the firm,
imposing a censure and a $15,000 fine for violations of FINRA Rules 7450 and 2010
occurring between April 1, 2013, and June 30, 2013, and between January 1, 2014, and
1
The firm changed its name from KCG Americas LLC to VIRTU Americas LLC in July 2017 after it was acquired
by VIRTU Americas LLC.
2
March 31, 2014. Specifically, the firm transmitted 177 Execution or Combined Order/
Execution Reports with an inaccurate reporting exception code of ‘M.’
On June 9, 2015, FINRA accepted AWC No. 20090211062-01 from the firm, imposing a
censure and a $107,500 fine, of which $50,000 related to violations of FINRA Rules
7450(a) and 2010 occurring between May 1 and August 31, 2012, including failure to
timely report nearly 129 million reportable order events (ROEs) to OATS and submission
of numerous execution reports with inaccurate special handling codes. (VIRTU Americas LLC)
VIRTU Americas LLC Report
A. The Firm Violated FINRA Rules 7450 and 2010 by Failing to Comply with Its
OATS Reporting Obligations.
FINRA Rule 7450(b) states that “[e]ach Reporting Member shall transmit to [OATS] a
a report containing each applicable item of order information identified in Rule 7440(b), (c),
and (d) whenever an order is originated, received, or transmitted to another department within
the member or to another member, modified, canceled, or executed.” (VIRTU Americas LLC)
Rule 7440 requires a
irm’s reports to OATS to reflect, among other things, the origin of the order, the market
participant symbol assigned by FINRA to the member firm, the type of account for which
the order is submitted, the designation of the order as fully or partially executed, and the
capacity in which the member executed the transaction.
FINRA Rule 2010 states that “[a] member, in the conduct of its business, shall observe
high standards of commercial honor and just and equitable principles of trade.” A
violation of FINRA Rule 7450 is a violation of FINRA Rule 2010.
Because FINRA uses OATS data as an integral part of its automated market surveillance
program to detect customer harm, manipulative activity, and other potential violations of
FINRA rules and federal securities laws, a failure to transmit ROEs, or the transmission
2 FINRA Rule 3110 superseded NASD Rule 3010 on December 1, 2014. (VIRTU Americas LLC)
of inaccurate or incomplete ROEs, can hamper FINRA’s ability to detect potentially
violative conduct and/or create false positive alerts, unnecessarily requiring the
expenditure of resources to resolve the alerts. Moreover, OATS reporting failures may
cause an inaccurate audit trail.
Between October 2013 and September 2016, the firm transmitted 1,569,725,427 ROEs to
OATS with inaccurate Account Type Codes, which provide information about the type of
account for which the orders were submitted. The firm inaccurately reported the ROEs to
OATS with an Account Type Code of ‘U.’(VIRTU Americas LLC)
This indicated that the firm received these orders from another broker-dealer for unknown beneficial owners, even though the firm did not receive the order from another broker-dealer and the account owners were known to the Firm.
These inaccurate reports occurred after the firm acquired multiple affiliates
with separate Market Participation Identifiers (MPIDs) and the orders were associated
with those MPIDs.
Additionally, between April 2015 and April 2018, the firm transmitted 3,864,198
execution reports to OATS that were required to be matched to the related trade report in
a FINRA transaction reporting facility. These reports contained inaccurate reporting
exception codes, generated by the firm’s electronic systems, which incorrectly indicated
that there were no corresponding trade reports to match each report. (VIRTU Americas LLC)
Specifically, between April 22, 2015, and March 23, 2017, the firm transmitted 3,465,236 execution
reports to OATS that inaccurately contained the “P” reporting exception code. Between
On January 1, 2016, and May 18, 2017, the firm transmitted 209,599 execution reports to
OATS that inaccurately contained the “M” reporting exception code.
Lastly, between On October 21, 2016, and April 30, 2018, the firm transmitted 189,403 execution reports to
OATS that inaccurately contained the ‘R’ reporting exception code. (VIRTU Americas LLC)
In addition, beginning on February 2, 2015, the firm, as a FINRA member operated an
ATS was required by Rules 6160, 6170, 6480, 6720, and 7440 to use a unique MPID to
report ATS transactions and was required to link all OATS execution reports from the firm’s ATS to a media-reported trade report.3.
However, from February 2, 2015, through August 2016, the firm failed to match 71,282,385 execution reports to a media trade report because it had not updated its execution protocol and related technology system to address the requirements for certain types of executions. These execution reports
represented 77.54% of the total execution reports submitted by the firm’s ATS during the
same period. (VIRTU Americas LLC)
Further, during several periods in 2016 and 2017, the firm, through several of its MPIDs,
failed to transmit a total of 2,750,534 ROEs to OATS. Specifically, between September
1, 2016, and February 28, 2017, the firm failed to report 1,941,163 ROEs to OATS due to
the firm’s misconfiguration of its electronic system. (VIRTU Americas LLC)
Due to other errors in the firm’s electronic systems, the firm failed, on September 28, 2016, through two MPIDs, to report
3 A media-reported trade report is one that is submitted to a FINRA facility and reported to and publicly
disseminated by the appropriate securities information processor
a total of 282,045 ROEs to OATS. Additionally, between July 3, 2017, and August 17,
2017, the firm failed to report 527,326 ROEs.
In August 2016, the firm failed to timely repair 3,406,854 ROEs that were rejected by
OATS for context or syntax errors. Between August 1 and August 8, 2016, one of the
firm’s MPIDs submitted 2,728,988 ROEs that OATS rejected for context or syntax
errors. (VIRTU Americas LLC)
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The firm attempted to resubmit these ROEs between February 16 and February
22, 2017, but the resubmissions were untimely because the firm failed to make the repairs
within five business days, the time period set forth in Section 6.6.2 of the OATS
Reporting Technical Specifications, promulgated pursuant to Rules 7440 and 7450.
Further, between August 1 and August 24, 2016, two of the firm’s MPIDs submitted a
total of 678,745 ROEs that OATS rejected for context or syntax errors. (VIRTU Americas LLC)
The firm attempted to resubmit these ROEs between February 28, 2017, and March 6, 2017, but the
resubmissions were untimely because the firm failed to make the repairs within five
business days, the time period set forth in Section 6.6.2 of the OATS Reporting Technical
Specifications, promulgated pursuant to Rules 7440 and 7450. (VIRTU Americas LLC)
By virtue of the foregoing, Respondent violated FINRA Rules 7450 and 2010.
B. The Firm Failed to Establish and Maintain a Supervisory System, Including
WSPs, Reasonably Designed to Achieve Compliance with FINRA Rule 7450.
NASD Rule 3010(a) and FINRA Rule 3110(a) required each FINRA member to establish
and maintain a system, including WSPs, to supervise the activities of each associated
person “that [wa]s reasonably designed to achieve compliance with applicable securities
laws and regulations, and with applicable [NASD/FINRA] Rules.” Violating NASD Rule
3010 and FINRA Rule 3110 also violate FINRA Rule 2010. (VIRTU Americas LLC)
Between October 2013 and April 2018, the firm failed to establish and maintain a supervisory system, including WSPs, reasonably designed to achieve compliance with its
OATS reporting requirements. The firm’s WSPs required that a designated reviewer
examine, on a quarterly basis, a sample of a minimum of five orders of various types to
determine if the OATS information was accurate.
The WSPs provided that the designated reviewer should sample new or unique order types or those order flows generating the highest number of order events. However, the minimum sample of five order types was unreasonably narrow, given the broad range of transactions the Firm had to report and the
the fact that the Firm transmitted approximately 9 billion ROEs to OATS on a quarterly basis during the Relevant Period.
By virtue of the foregoing, the firm failed to establish and maintain a supervisory system,
including WSPs, reasonably designed to achieve compliance with FINRA Rule 7450 and
thus violated NASD Rule 3010 and FINRA Rules 3110 and 2010.
Penalties, Punishments & Sanctions – VIRTU Americas LLC
- A censure,
- A $120,000 fine, and
5 - An undertaking to review and revise the firm’s supervisory systems and
procedures concerning OATS reporting to ensure that they are reasonably
designed to achieve compliance with FINRA Rule 7450 and to implement all
changes necessary to remediate the violations identified herein. - a. Within 90 days of the date this AWC is accepted, a certification from a
senior officer and principal of the firm with supervisory authority over the
firm’s supervisory system regarding FINRA Rule 7450 that the firm has
enhanced its supervisory systems and written supervisory procedures in
ways that are reasonably expected to address the areas of conduct
discussed in this AWC. - This certification shall be submitted by letter
addressed to Carolyn O’Leary, Senior Counsel, FINRA, at the address set
forth below, and to ca************@fi***.org.
b. The Department of Enforcement may, upon a showing of good cause and
in its sole discretion, extend the time for compliance with these provisions. - Respondent agrees to pay the monetary sanction upon notice that this AWC has been
accepted and that such payment is due and payable. Respondent has submitted an
Election of Payment form showing the method by which it proposes to pay the fine
imposed. - Respondent specifically and voluntarily waives any right to claim an inability to pay, now
or at any time hereafter, the monetary sanction imposed in this matter.
VIRTU Americas LLC Review
Between October 2013 and April 2018, the firm violated FINRA Rules 7450 and 2010 by
failing to comply with its Order Audit Trail System (OATS) reporting obligations.
Specifically, the firm (a) transmitted more than 1.5 billion ROEs to OATS containing
incorrect information; (b) transmitted more than 71 million execution reports to OATS
that failed to match media trade reports; (c) failed to report more than 2 million ROEs to
OATS; and (d) failed to repair timely more than 3 million ROEs that OATS rejected due
to errors.
Additionally, between October 2013 and April 2018, the firm violated NASD Rule 3010
and FINRA Rules 3110 and 20102
by failing to establish and maintain a supervisory
the system, including written supervisory procedures (WSPs), reasonably designed to
achieve compliance with FINRA Rule 7450.
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Help For Victims Of VIRTU Americas LLC
If you have lost funds because of misrepresentation, unsuitable investment, or unsuitable investment strategy from VIRTU Americas LLC. Then you can take legal action and get justice. Fraud, Malpractice & dereliction of duty should not be taken lightly, especially in this industry. We highly suggest that you notify authorities or seek legal action if your financial advisor or brokerage firm fails to abide by FINRA’s rules are regulations.
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Financial advisors are regulatory & legally obligated to suggest (recommend) the most suitable investments/investment strategies to their clients. Their suggestions should have their client’s best interests and should be appropriate for their client’s goals and needs. Similarly, the brokerage firm which hires financial advisors also has a regulatory & legal obligation to keep a close watch and supervise their Financial Advisors’ practices & behavior.
They need to make sure that the financial advisor is not being manipulative or having an unreasonable bias towards certain investments. If the financial advisor and/or the brokerage firm breaches these duties, then the client/customer may be entitled to a full or partial recovery of their losses.
Financial advisors need to have the interest of their clients when giving suggestions related to investments and investment strategies. Reasonable basis suitability requires the advisor to do their best to analyze & identify the risks and rewards associated with their suggested investment and/or investment strategy.
