FINRA Orders Wolverine to Pay a Fine of $170,000 for Short Selling Regulation Violations

FINRA has fined Wolverine Execution Services, LLC (“Wolverine”) with $170,000 for Wolverine violating short selling regulation rules.

Between May 2016 and March 2019, Wolverine violated Regulation SHO (Reg SHO) Rule 200(g), promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), and FINRA Rule 2010, by inaccurately marking sell orders as long rather than short in 18,756 instances.

The company also violated Reg SHO Rule 203(b) and FINRA Rule 2010 by failing to document compliance with the locate requirement in 556,388 instances during February 2018.

Moreover, between December 20, 2017 and June 20, 2018, Wolverine violated FINRA Rules 7230A and 2010 by failing to report or submitting incorrect reports to the FINRA Trade Reporting Facility (TRF) in at least 706 instances. During this same period, Wolverine also failed to report accurate order information to the Order Audit Trail System (OATS) in 31 instances, in violation of FINRA Rules 7450 and 2010, and violated FINRA Rules 7440 and 2010 by failing in 15 instances to record and preserve order event information.

Additionally, during the first quarter of 2018, the firm violated Regulation NMS (Reg NMS) Rule 606, promulgated under the Exchange Act, and FINRA Rule 2010, by failing to disclose all material aspects of its relationship with significant execution venues, including a description of any payment for order flow (PFOF) arrangement between the firm and any such execution venue.

Finally, Wolverine violated FINRA Rules 3110(a) and (b) and 2010 by failing to establish and maintain supervisory systems, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the above-cited rules.