Citadel Settles with FINRA for $1 Million Over Reporting Violations

Citadel Securities LLC has agreed to pay a $1 million fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA), following violations related to its Consolidated Audit Trail (CAT) reporting obligations.

The firm failed to accurately and timely report tens of billions of equity and option order events to the CAT Central Repository between June 22, 2020, and August 28, 2024, violating FINRA Rules 6830, 6893, and 2010.

As one of the largest market makers, Citadel Securities was required to report data for equity and option order events starting on June 22, 2020. However, the firm encountered multiple issues with its proprietary reporting system, leading to significant reporting errors. Between June 2020 and July 2022, Citadel inaccurately reported 42.2 billion equity and option order events, with three major reporting issues accounting for 41.8 billion of these inaccuracies. These issues included failing to report "0" in the "leaves quantity" field for fully canceled orders, using the wrong indicators for new orders, and not populating the Immediate or Cancel (IOC) Time-in-Force code for relevant orders.

In addition, Citadel Securities failed to timely report approximately 580 million equity and option order events. The firm ultimately remediated the errors by September 2022, submitting corrections for the inaccurate and late-reported order events. Citadel identified several of these errors through its internal supervisory reviews, attributing the issues to coding errors, system problems, and misinterpretations of reporting requirements.