描述
This matter involves violations by GSEC and SHD of their basic obligation as specialists to serve public customer orders over their own proprietary interests. As specialist firms on each of the Exchanges,2
GSEC and SHD had a general duty to match executable public customer or “agency” buy and sell orders and not to fill customer orders through trades from the firms’ own accounts when those customer orders could be matched with other customer orders. From 1999 through 2005 (the “Relevant Period”), GSEC and SHD violated this obligation by filling orders through proprietary trades rather than through other customer orders, thereby causing customer orders to be disadvantaged by approximately $6 million. 4. By effecting proprietary transactions that were not part of a course of dealings reasonably necessary to maintain a fair and orderly market, GSEC and SHD violated Section 11(b) of the Exchange Act and Rule 11b-1 thereunder. Respondents also violated the following Exchange rules 1
The findings herein are made pursuant to Respondents’ Offer and are not binding on any other person or entity in this or any other proceeding. 2
On the CBOE, specialist firms like GSEC and SHD are known as Designated Primary MarketMakers, or DPMs. 2
in effect during the Relevant Period: AMEX rules 150(a), 150(b), 155 and 170(d); CBOE rules 8.80 and 8.85; and PHLX rules 1020(c), 1019 and 707.
