Scottrade Hit for 1,231 Failed Blue Sheet Submissions To SEC

January 29, 2014

On January 29, 2014, the Securities and Exchange Commission ("SEC") charged brokerage firm Scottrade, Inc. with failing to provide on 1,231 occasions between March 2006 and April 2012, complete and accurate "Blue Sheet" data. Contemporaneous with the announced charges, the firm agreed to pay a $2.5 million penalty and admitted the facts underlying the charges. In The Matter of Scottrade,Inc., Respondent (Order Instituting Administrative And Cease-And-Desist Proceedings, 1934 Act Release 71435, Admin. Proc. 3-15702 / January 29, 2014).

The SEC's Order Instituting Proceedings (the "OIP") offers the following admonition:

It is a fundamental obligation of broker-dealers to provide complete and accurate blue sheet data when requested by representatives of the Commission to do so. Blue sheet data is critical to many aspects of the Commission's operations and its ability to discharge its enforcement and  regulatory mandates. The failure of a broker-dealer to provide complete and accurate blue sheet information in response to a Commission request can impact the Commission's ability to discharge  its statutory obligations, undermine the integrity of its investigations and examinations, and  ultimately interfere with the Commission's ability to protect investors. 

The OIP alleges that in response to Blue Sheet requests in December 2011 in connection with an investigation of suspicious trading in an online account, the SEC Staff discovered that Scottrade's submission had failed to include data from a number of apparently unauthorized trades. In response to the Staff's discovery, Scottrade allegedly blamed a computer coding error.

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