BofA Securities Hit With $24M FINRA Fine for Spoofing

From October 2014 through February 2021, BofA Securities, through a former supervisor and a former junior trader, engaged in 717 instances of spoofing in a U.S. Treasury security to induce opposite-side executions in the same security or a correlated futures contract, according to FINRA.

In addition, from at least October 2014 through September 2022, BofA Securities failed to establish and maintain a supervisory system reasonably designed to detect spoofing in U.S. Treasury markets, FINRA said.

BofA Securities lacked a supervisory system to detect spoofing in Treasurys until November 2015, FINRA said. That system was deficient until mid-2019, as it was designed to detect spoofing by trading algorithms, not manual spoofing by its traders, like the 717 instances addressed in the settlement.

Also, until at least December 2020, BofA Securities’ surveillance did not capture orders that its traders entered into certain systems provided by external venues. And the firm didn’t supervise for potential cross-product spoofing in Treasuries through September 2022, FINRA added.

Bank of America provided the following comment to ThinkAdvisor:

“This matter stems from the actions of two former employees. Over the past several years, we have made significant investments to enhance our controls, including improved surveillance, increased staff, additional training and updated policies. We worked cooperatively with FINRA to resolve this matter.”

Photo: AP