By Sarah N. Lynch and Aruna Viswanatha
WASHINGTON Jan 29 Brokerage Scottrade Inc
admitted on Wednesday to breaking civil laws by
providing incomplete trading data to federal regulators, and
agreed to pay a $2.5 million fine to settle the case, officials
The settlement between St. Louis-based Scottrade and the
U.S. Securities and Exchange Commission marks the fourth the
agency has extracted an admission of wrongdoing from a
In this case, the SEC said Scottrade failed on 1,231
occasions over the course of six years to give the agency
accurate trading data as a result of a coding error.
In a statement, Scottrade said the omissions in the trading
data were inadvertent and the problem was fixed.
SEC Chair Mary Jo White unveiled a new settlement policy
last June that would require defendants in some egregious cases
to make admissions, rather than letting them settle without
admitting or denying the charges.
"When the situation was discovered, Scottrade promptly
conducted a thorough assessment, corrected the issue and
supplied the missing information," a spokeswoman said.
The company is also retaining an independent consultant to
review its record-keeping practices, the spokeswoman added.
Federal securities laws require broker-dealers to provide
electronic "blue sheet" trading data upon request to the SEC.
The data is typically requested in connection with
investigations into questionable trading patterns.
"Blue sheet information is the lifeblood of many SEC
investigations and examinations," said Andrew Ceresney, the head
of the SEC's Enforcement Division.
"When firms fail to provide us with accurate or complete
trade data, it risks compromising our ability to detect and
investigate securities law violations."
The SEC said it uncovered the six-year-old problem with
Scottrade's blue sheet data, which dates back to 2006, during
the course of a December 2011 investigation into possible
The SEC requested trading data to look into the suspicious
trades. But after it received the data, SEC staff discovered it
lacked crucial information, including missing trades that arose
from the "unauthorized account intrusions."
The SEC went back to ask Scottrade about the data, and the
brokerage discovered a coding error was to blame.