SEC Fines Cantor Fitzgerald $1.4 Million Over Filing Lapses

The U.S. Securities and Exchange Commission (SEC) has imposed a $1.4 million fine on Cantor Fitzgerald for its repeated failure to identify and report customers who qualified as large traders. According to the SEC, Cantor Fitzgerald neglected to track and report over 100 large traders over a six-year period. The regulator also revealed that the company had failed to file required forms identifying itself or its affiliates as large traders for more than a decade.

The SEC's investigation found that Cantor Fitzgerald's lapses in compliance occurred over an extended period, potentially compromising the transparency and integrity of the market. Large traders are required to be identified and reported to regulators as they have the potential to impact market dynamics significantly.

The financial penalty reflects the seriousness of Cantor Fitzgerald's failure to fulfill its regulatory obligations. However, the SEC noted that the firm has taken steps to improve its compliance practices. Cantor Fitzgerald implemented updated reporting procedures in December 2022 and May 2023, demonstrating its commitment to rectifying the lapses identified by the SEC.

Implications for Compliance Officers

• Heightened Regulatory Scrutiny: The SEC's enforcement action against Cantor Fitzgerald highlights the intensified focus on compliance obligations, particularly regarding the identification and reporting of large traders. Compliance officers should ensure that robust systems and procedures are in place to accurately identify and report large traders as required by regulatory guidelines.
• Importance of Timely and Accurate Reporting: Cantor Fitzgerald's failure to file forms and report large traders over an extended period resulted in regulatory penalties. Compliance officers must emphasize the significance of timely and accurate reporting to ensure transparency and maintain regulatory compliance.
• Risk Management and Internal Controls: Compliance officers play a crucial role in establishing and maintaining effective risk management practices and internal controls within their organizations. This includes implementing mechanisms to identify and track large traders and promptly address any lapses or deficiencies in reporting processes.
• Continuous Improvement of Compliance Practices: Cantor Fitzgerald's implementation of updated reporting procedures demonstrates the importance of ongoing evaluation and enhancement of compliance practices. Compliance officers should regularly review and update internal procedures to align with regulatory requirements and industry best practices.
• Communication and Collaboration: Compliance officers should foster open lines of communication with relevant stakeholders within the organization, including senior management, legal teams, and operations personnel. Effective collaboration is essential to ensure compliance with regulatory obligations and address any potential lapses in a timely manner.

While Cantor Fitzgerald has taken corrective measures to improve its compliance procedures, the SEC's enforcement action serves as a reminder to financial institutions regarding the importance of diligently fulfilling regulatory obligations. Compliance officers have a critical role in upholding the integrity of the market and ensuring adherence to applicable regulations to protect their organizations and the broader financial system.