The Financial Industry Regulatory Authority (FINRA) has fined Odeon Capital Group $75,000 for multiple supervisory failures, including inadequate systems to detect prearranged trading and failure to disclose key information on customer trade confirmations.
Odeon Capital Fined by FINRA
FINRA claims that from July 2019 onwards, Odeon Capital, a New York-based broker-dealer, failed to establish a supervisory system capable of identifying potentially manipulative prearranged trading, an illegal practice where buyers and sellers collude to execute trades at predetermined prices.
FINRA found that the firm’s daily trade reports were not equipped to detect such patterns and lacked proper oversight procedures. This led to at least 138 instances of suspicious trading going unreviewed.
In addition, between December 2019 and December 2021, the firm is said to have issued 717 customer trade confirmations, covering municipal, corporate, and agency debt transactions, without disclosing the required mark-up or mark-down information.
These omissions violated both FINRA and Municipal Securities Rulemaking Board (MSRB) rules, designed to protect investors and promote transparency in transaction pricing.
FINRA also cited Odeon’s written supervisory procedures (WSPs) as deficient, offering no clear guidance on how to ensure proper disclosures or identify suspicious trading behaviour.
The regulator stated that although the firm has since updated its WSPs, it has agreed to undertake further remediation and submit a senior-level certification within 60 days, confirming that effective systems are now in place.
The sanctions include a formal censure and the fine, with Odeon consenting to the penalties without admitting or denying the findings.
This enforcement action follows a broader examination of the firm’s trading practices.
