CUTLER GROUP, LP

BrokerCheck Report

CUTLER GROUP, LP

Section Title

Report Summary

Firm History

CRD# 31730

1

7

Firm Profile 2 - 6

Page(s)

Firm Operations 8 - 13

Disclosure Events 14

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CUTLER GROUP, LP

CRD# 31730

SEC# 8-42415

Main Office Location

101 MONTGOMERY STSUITE 700SAN FRANCISCO, CA 94104

Mailing Address


Business Telephone Number

415-293-3956

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 27

Arbitration 1

Firm Profile

This firm is classified as a partnership.

This firm was formed in California on 02/24/1994.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 3 types of businesses.

This firm is not affiliated with any financial orinvestment institutions.

This firm does not have referral or financialarrangements with other brokers or dealers.

This firm is registered with:

• the SEC• 14 Self-Regulatory Organizations• 0 U.S. states and territories

www.finra.org/brokercheck User Guidance

1©2022 FINRA. All rights reserved. Report about CUTLER GROUP, LP


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This firm is classified as a partnership.

This firm was formed in California on 02/24/1994.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.

CUTLER GROUP, LP

SEC#

31730

8-42415

Main Office Location

Mailing Address

Business Telephone Number

Doing business as CUTLER GROUP, LP

415-293-3956








This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

CUTLER, TRENT SHAWN

DIRECTOR

10% but less than 25%

No

Individual

10/2017

No

1749857

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


JUNO, STEVEN D

LIMITED PARTNER


No

Individual

01/2019

No

4946514



Position

Position Start Date

HILL, JONATHAN LEE

CEO

Individual

10/2017

4993712








Direct Owners and Executive Officers (continued)

Firm Profile



Position Start Date


Less than 5%

No

10/2017

No

Position



Position Start Date


PATTERSON, DOUGLAS BRIAN

CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

07/2012

Yes

2566967



Position



Position Start Date


SHARABATI, NADER ALI

CFO AND FINOP

Less than 5%

No

Individual

02/2007

Yes

4297907








Direct Owners and Executive Officers (continued)

Firm Profile

Position



Position Start Date


TRENT CUTLER CAPITAL, LLC

GENERAL PARTNER

Less than 5%

No

Domestic Entity

02/1994

Yes








This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

CUTLER, TRENT SHAWN

GENERAL PARTNER

TRENT CUTLER CAPITAL, LLC


No

Individual

02/1994

Yes

1749857



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established









Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

No information reported.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 14 SROs and 0 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

No

No

No

Federal Regulator Status Date Effective

SEC Approved 04/20/1990

Self-Regulatory Organization Status Date Effective

Cboe BYX Exchange, Inc. Termination Requested 12/31/2019

Cboe BZX Exchange, Inc. Approved 04/01/2010

Cboe C2 Exchange, Inc. Approved 05/04/2021

Cboe EDGX Exchange, Inc. Approved 10/16/2015

Cboe Exchange, Inc. Approved 04/05/1999

MIAX PEARL, LLC Approved 02/06/2017

Miami International Securities Exchange,LLC

Approved 11/02/2015

NYSE American LLC Approved 08/05/2013

NYSE Arca, Inc. Approved 04/04/1994

Nasdaq GEMX, LLC Approved 11/13/2013

Nasdaq ISE, LLC Approved 05/09/2012

Nasdaq MRX, LLC Approved 09/03/2019

Nasdaq PHLX LLC Approved 10/03/2005

Nasdaq Stock Market Approved 11/14/2011






Firm Operations

Registrations (continued)






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does effect transactions in commodities, commodity futures, or commodity options.This firm does not engage in other non-securities business.

Non-Securities Business Description:

This firm currently conducts 3 types of businesses.

Types of Business

Exchange member engaged in floor activities

Put and call broker or dealer or option writer

Trading securities for own account






Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does not refer or introduce customers to other brokers and dealers.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

This firm does have accounts, funds, or securities maintained by a third party.

This firm does not have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing

Name: MERRILL LYNCH PROFESSIONAL CLEARING CORP.

Business Address: 440 SOUTH LASALLE STSUITE 1124CHICAGO, IL 60605

CRD #: 16139

Effective Date: 08/28/2002

Description: WE HAVE AN ARRANGEMENT WITH MERRILL LYNCH WHEREBY THEYHOLD/MAINTAIN SOME OF CUTLER GROUP L.P.'S BOOKS ANDRECORDS.

Name: MERRILL LYNCH PROFESSIONAL CLEARING CORP.

Business Address: 440 SOUTH LASALLE STSUITE 1124CHICAGO, IL 60605

CRD #: 16139

Effective Date: 08/28/2002

Description: WE HAVE AN ARRANGEMENT WITH MERRILL LYNCH WHEREBY THEYHOLD/MAINTAIN ALL OF CUTLER GROUP L.P.'S ACCOUNTS, FUNDS, ANDSECURITIES.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is not, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 27 0

Arbitration N/A 1 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

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§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 27

Reporting Source: Regulator

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ONSEPTEMBER 26, 2018, (THE "REVIEW PERIOD"), CUTLER GROUP, L.P.PARTICIPATED IN THE PARTIAL TENDER OFFER BY ABC CORPORATION("ABC"). THE FINDINGS STATED THAT IN DOING SO, CUTLER FAILED TOACCOUNT FOR RELEVANT IN-THE-MONEY SHORT CALL OPTIONSPOSITIONS WHEN DETERMINING ITS "NET LONG POSITION" AS DEFINEDBY EXCHANGE ACT RULE 14E-4, AND OVER-TENDERED 1,000 SHARES. AS ARESULT OF THE CONDUCT DESCRIBED ABOVE, CUTLER VIOLATEDEXCHANGE ACT RULE 14E-4(B). IN ADDITION, DURING THE REVIEWPERIOD, CUTLER VIOLATED NYSE ARCA RULE 11.18 BY FAILING TOESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ENSURE COMPLIANCE WITHEXCHANGE ACT RULE 14E-4(B).

Current Status: Final






Initiated By: NYSE ARCA, INC.

Principal Sanction(s)/ReliefSought:

Other

Other Sanction(s)/ReliefSought:

N/A

Date Initiated: 02/03/2020

Docket/Case Number: 2018060881003

Principal Product Type: Other

Other Product Type(s): COMPANY STOCK

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ONSEPTEMBER 26, 2018, (THE "REVIEW PERIOD"), CUTLER GROUP, L.P.PARTICIPATED IN THE PARTIAL TENDER OFFER BY ABC CORPORATION("ABC"). THE FINDINGS STATED THAT IN DOING SO, CUTLER FAILED TOACCOUNT FOR RELEVANT IN-THE-MONEY SHORT CALL OPTIONSPOSITIONS WHEN DETERMINING ITS "NET LONG POSITION" AS DEFINEDBY EXCHANGE ACT RULE 14E-4, AND OVER-TENDERED 1,000 SHARES. AS ARESULT OF THE CONDUCT DESCRIBED ABOVE, CUTLER VIOLATEDEXCHANGE ACT RULE 14E-4(B). IN ADDITION, DURING THE REVIEWPERIOD, CUTLER VIOLATED NYSE ARCA RULE 11.18 BY FAILING TOESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ENSURE COMPLIANCE WITHEXCHANGE ACT RULE 14E-4(B).

Resolution Date: 02/03/2020

Resolution:

Other Sanctions Ordered:

Sanction Details: THE FIRM WAS CENSURED, FINED $6,500, AND ORDERED TO PAYDISGORGEMENT IN THE AMOUNT OF $837.52 (OF WHICH $279.17 SHALL BEPAID TO NYSE ARCA.

Regulator Statement ACCEPTANCE OF THIS AWC IS CONDITIONED UPON ACCEPTANCE OFSIMILAR AGREEMENTS IN RELATED MATTERS BETWEEN THE FIRM ANDNYSE AMERICAN, AND CBOE.

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Sanctions Ordered: CensureMonetary/Fine $6,500.00Disgorgement/Restitution

Acceptance, Waiver & Consent(AWC)






Regulator Statement ACCEPTANCE OF THIS AWC IS CONDITIONED UPON ACCEPTANCE OFSIMILAR AGREEMENTS IN RELATED MATTERS BETWEEN THE FIRM ANDNYSE AMERICAN, AND CBOE.

iReporting Source: Firm



Other


N/A





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ONSEPTEMBER 26,2018, (THE "REVIEW PERIOD"), CUTLER GROUP, L.P. PARTICIPATED IN THEPARTIAL TENDER OFFER BY ABC CORPORATION ("ABC"). THE FINDINGSSTATED THAT IN DOING SO, CUTLER FAILED TO ACCOUNT FOR RELEVANTIN-THE-MONEY SHORT CALL OPTIONS POSITIONS WHEN DETERMININGITS"NET LONG POSITION" AS DEFINED BY EXCHANGE ACT RULE 14E-4, ANDOVER-TENDERED 1,000 SHARES. AS A RESULT OF THE CONDUCTDESCRIBEDABOVE, CUTLER VIOLATED EXCHANGE ACT RULE 14E-4(B). IN ADDITION,DURING THE REVIEW PERIOD, CUTLER VIOLATED NYSE ARCA RULE 11.18BYFAILING TO ESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ENSURE COMPLIANCE WITHEXCHANGE ACT RULE 14E-4(B).



Resolution:










Sanction Details: THE FIRM WAS CENSURED, FINED $6,500, AND ORDERED TO PAYDISGORGEMENT IN THE AMOUNT OF $837.52 (OF WHICH $279.17 SHALL BEPAID TONYSE ARCA.

Firm Statement ACCEPTANCE OF THIS AWC IS CONDITIONED UPON ACCEPTANCE OFSIMILAR AGREEMENTS IN RELATED MATTERS BETWEEN THE FIRM ANDNYSEAMERICAN, AND CBOE.

Disclosure 2 of 27

i


Initiated By: NYSE AMERICAN LLC


Other


N/A





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ONSEPTEMBER 26, 2018, (THE "REVIEW PERIOD"), CUTLER GROUP, L.P.PARTICIPATED IN THE PARTIAL TENDER OFFER BY ABC CORPORATION("ABC"). THE FINDINGS STATED THAT IN DOING SO, CUTLER FAILED TOACCOUNT FOR RELEVANT IN-THE-MONEY SHORT CALL OPTIONSPOSITIONS WHEN DETERMINING ITS "NET LONG POSITION" AS DEFINEDBY EXCHANGE ACT RULE 14E-4, AND OVER-TENDERED 1,000 SHARES. AS ARESULT OF THE CONDUCT DESCRIBED ABOVE, CUTLER VIOLATEDEXCHANGE ACT RULE 14E-4(B). IN ADDITION, DURING THE REVIEWPERIOD, CUTLER VIOLATED NYSE AMERICAN RULE 320 BY FAILING TOESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ENSURE COMPLIANCE WITHEXCHANGE ACT RULE 14E-4(B).



Resolution: Acceptance, Waiver & Consent(AWC)








Sanction Details: THE FIRM WAS CENSURED, FINED $6,500, AND ORDERED TO PAYDISGORGEMENT IN THE AMOUNT OF $837.52 (OF WHICH $279.17 SHALL BEPAID TO NYSE AMERICAN.

Regulator Statement ACCEPTANCE OF THIS AWC IS CONDITIONED UPON ACCEPTANCE OFSIMILAR AGREEMENTS IN RELATED MATTERS BETWEEN THE FIRM ANDNYSE ARCA, AND CBOE.


No






Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ONSEPTEMBER 26,2018, (THE "REVIEW PERIOD"), CUTLER GROUP, L.P. PARTICIPATED IN THEPARTIAL TENDER OFFER BY ABC CORPORATION ("ABC"). THE FINDINGSSTATED THAT IN DOING SO, CUTLER FAILED TO ACCOUNT FOR RELEVANTIN-THE-MONEY SHORT CALL OPTIONS POSITIONS WHEN DETERMININGITS"NET LONG POSITION" AS DEFINED BY EXCHANGE ACT RULE 14E-4, ANDOVER-TENDERED 1,000 SHARES. AS A RESULT OF THE CONDUCTDESCRIBEDABOVE, CUTLER VIOLATED EXCHANGE ACT RULE 14E-4(B). IN ADDITION,DURING THE REVIEW PERIOD, CUTLER VIOLATED NYSE AMERICAN RULE320 BYFAILING TO ESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ENSURE COMPLIANCE WITHEXCHANGE ACT RULE 14E-4(B).








Other


N/A





Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $6,500, AND ORDERED TO PAYDISGORGEMENT IN THE AMOUNT OF $837.52 (OF WHICH $279.17 SHALL BEPAID TONYSE AMERICAN.

Firm Statement ACCEPTANCE OF THIS AWC IS CONDITIONED UPON ACCEPTANCE OFSIMILAR AGREEMENTS IN RELATED MATTERS BETWEEN THE FIRM ANDNYSE ARCA,AND CBOE.



Disclosure 3 of 27

i


Initiated By: CBOE EXCHANGE, INC.

Allegations: CUTLER GROUP, LP: (I) TENDERED SHARES FOR PARTIAL TENDER OFFERSIN EXCESS OF THE FIRM'S NET LONG POSITION; (II) FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE WRITTEN SUPERVISORY PROCEDURES, AND ASYSTEM FOR APPLYING SUCH PROCEDURES, REASONABLY DESIGNED TOPREVENT AND DETECT VIOLATIONS OF EXCHANGE ACT RULE 14E-4.

VIOLATION OF CBOE RULES 4.2 AND 4.24; RULE 14E-4 PROMULGATEDUNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

SANCTION: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $70,000AND DISGORGEMENT IN THE AMOUNT OF $440,535.







Initiated By: CBOE EXCHANGE, INC.


Disgorgement


CENSURE AND A MONETARY FINE


Docket/Case Number: STAR NOS. 20170546006 AND 20180608810 / USRI-8695 AND USRI-8835

Principal Product Type: Options

Other Product Type(s):


Resolution:


Sanction Details: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $70,000 ANDDISGORGEMENT IN THE AMOUNT OF $440,535

Regulator Statement CONSOLIDATED OFFER OF SETTLEMENT AND LETTER OF CONSENT


No


Settled


Allegations: CUTLER GROUP, LP: (I) TENDERED SHARES FOR PARTIAL TENDER OFFERSIN EXCESS OF THE FIRM'S NET LONG POSITION; (II) FAILEDTO ESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORYPROCEDURES, AND A SYSTEM FOR APPLYING SUCH PROCEDURES,REASONABLY DESIGNED TO PREVENT AND DETECT VIOLATIONS OFEXCHANGE ACT RULE 14E-4. VIOLATION OF CBOE RULES 4.2 AND4.24; RULE 14E-4 PROMULGATED UNDER THE SECURITIES EXCHANGE ACTOF 1934, AS AMENDED. SANCTION: A CENSURE, A MONETARYFINE IN THE AMOUNT OF $70,000 AND DISGORGEMENT IN THE AMOUNT OF$440,535.







Initiated By: CBOE EXCHANGE, INC


Disgorgement


CENSURE AND A MONETARY FINE


Docket/Case Number: STAR NOS. 20170546006 AND 20180608810 / USRI-8695 AND USRI-8835



CUTLER GROUP, LP: (I) TENDERED SHARES FOR PARTIAL TENDER OFFERSIN EXCESS OF THE FIRM'S NET LONG POSITION; (II) FAILEDTO ESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORYPROCEDURES, AND A SYSTEM FOR APPLYING SUCH PROCEDURES,REASONABLY DESIGNED TO PREVENT AND DETECT VIOLATIONS OFEXCHANGE ACT RULE 14E-4. VIOLATION OF CBOE RULES 4.2 AND4.24; RULE 14E-4 PROMULGATED UNDER THE SECURITIES EXCHANGE ACTOF 1934, AS AMENDED. SANCTION: A CENSURE, A MONETARYFINE IN THE AMOUNT OF $70,000 AND DISGORGEMENT IN THE AMOUNT OF$440,535.


Resolution:


Sanction Details: A CENSURE, A MONETARY FINE IN THE AMOUNT OF $70,000 ANDDISGORGEMENT IN THE AMOUNT OF $440,535

Firm Statement CONSOLIDATED OFFER OF SETTLEMENT AND LETTER OF CONSENT


Settled

Disclosure 4 of 27

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, CUTLER GROUP, LP("CUTLER" OR THE "FIRM") CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT THE FIRM SUBMITTED MULTIPLE REQUEST FORRESPONSES ("RFR") RESPONSES AT THE SAME PRICE THAT IN THEAGGREGATE EXCEEDED THE SIZE OF THE CUSTOMER BEST EXECUTION("CUBE") ORDER OCCASIONS. THESE MULTIPLE RFR RESPONSESRESULTED FROM THE FIRM'S USE OF TWO MARKET DATA FEEDS TOPARTICIPATE IN THE CUBE AUCTION. THOSE MARKET DATA FEEDS EACHRECEIVED RFRS FROM NYSE AMERICAN FOR CUBE AUCTIONS AND INTURN FORWARDED THE RFRS TO CUTLER'S QUOTING/ORDER ENTRYSYSTEM. BECAUSE CUTLER'S QUOTING/ORDER ENTRY SYSTEM DID NOTRECOGNIZE THAT IT WAS RECEIVING TWO RFRS FOR THE SAME CUBEAUCTION, IT SUBMITTED TWO RFR RESPONSES AT THE SAME PRICE THATIN AGGREGATE EXCEEDED THE SIZE OF THE CUBE ORDER.

THE FINDINGS STATED THAT CUTLER DID NOT HAVE A SYSTEM OFCOMPLIANCE AND SUPERVISORY CONTROLS AND WRITTEN COMPLIANCEAND SUPERVISORY POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE. CUTLER DID NOT HAVE ANY WRITTENSUPERVISORY PROCEDURES CONCERNING THE NYSE AMERICAN CUBEAUCTION. NOR DID THE FIRM HAVE SUPERVISORY CONTROLS IN PLACETO REVIEW RFR RESPONSES SUBMITTED TO THE CUBE AUCTION,INCLUDING ANY CONTROLS TO DETECT AND PREVENT THE SUBMISSIONOF MULTIPLE RFR RESPONSES AT THE SAME PRICE THAT IN AGGREGATEEXCEEDED THE CUBE ORDER SIZE.











Docket/Case Number: 2019-03-00093



WITHOUT ADMITTING OR DENYING THE FINDINGS, CUTLER GROUP, LP("CUTLER" OR THE "FIRM") CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT THE FIRM SUBMITTED MULTIPLE REQUEST FORRESPONSES ("RFR") RESPONSES AT THE SAME PRICE THAT IN THEAGGREGATE EXCEEDED THE SIZE OF THE CUSTOMER BEST EXECUTION("CUBE") ORDER OCCASIONS. THESE MULTIPLE RFR RESPONSESRESULTED FROM THE FIRM'S USE OF TWO MARKET DATA FEEDS TOPARTICIPATE IN THE CUBE AUCTION. THOSE MARKET DATA FEEDS EACHRECEIVED RFRS FROM NYSE AMERICAN FOR CUBE AUCTIONS AND INTURN FORWARDED THE RFRS TO CUTLER'S QUOTING/ORDER ENTRYSYSTEM. BECAUSE CUTLER'S QUOTING/ORDER ENTRY SYSTEM DID NOTRECOGNIZE THAT IT WAS RECEIVING TWO RFRS FOR THE SAME CUBEAUCTION, IT SUBMITTED TWO RFR RESPONSES AT THE SAME PRICE THATIN AGGREGATE EXCEEDED THE SIZE OF THE CUBE ORDER.

THE FINDINGS STATED THAT CUTLER DID NOT HAVE A SYSTEM OFCOMPLIANCE AND SUPERVISORY CONTROLS AND WRITTEN COMPLIANCEAND SUPERVISORY POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE. CUTLER DID NOT HAVE ANY WRITTENSUPERVISORY PROCEDURES CONCERNING THE NYSE AMERICAN CUBEAUCTION. NOR DID THE FIRM HAVE SUPERVISORY CONTROLS IN PLACETO REVIEW RFR RESPONSES SUBMITTED TO THE CUBE AUCTION,INCLUDING ANY CONTROLS TO DETECT AND PREVENT THE SUBMISSIONOF MULTIPLE RFR RESPONSES AT THE SAME PRICE THAT IN AGGREGATEEXCEEDED THE CUBE ORDER SIZE.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $7,500.

Regulator Statement IN RESOLVING THIS MATTER, NYSE REGULATION ALSO CONSIDERED THEREMEDIAL ACTIONS TAKEN BY THE FIRM. CUTLER NOW USES ONEMARKET DATA FEED TO SEND RFRS TO ITS QUOTING/ORDER ENTRYSYSTEM IN ORDER TO LIMIT ITS RFR RESPONSES TO ONE RESPONSEPROGRAMMED NOT TO EXCEED THE CUBE ORDER SIZE. IN ADDITION,CUTLER REVISED ITS WRITTEN SUPERVISORY PROCEDURES TO INCLUDEA DAILY SUPERVISORY REPORT TO REVIEW FOR MULTIPLE RFRRESPONSES AND FOR AGGREGATE RESPONSES THAT EXCEED THE CUBEORDER SIZE.


No

Sanctions Ordered: CensureMonetary/Fine $7,500.00






www.finra.org/brokercheck User GuidanceIN RESOLVING THIS MATTER, NYSE REGULATION ALSO CONSIDERED THEREMEDIAL ACTIONS TAKEN BY THE FIRM. CUTLER NOW USES ONEMARKET DATA FEED TO SEND RFRS TO ITS QUOTING/ORDER ENTRYSYSTEM IN ORDER TO LIMIT ITS RFR RESPONSES TO ONE RESPONSEPROGRAMMED NOT TO EXCEED THE CUBE ORDER SIZE. IN ADDITION,CUTLER REVISED ITS WRITTEN SUPERVISORY PROCEDURES TO INCLUDEA DAILY SUPERVISORY REPORT TO REVIEW FOR MULTIPLE RFRRESPONSES AND FOR AGGREGATE RESPONSES THAT EXCEED THE CUBEORDER SIZE.









Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, CUTLER GROUP, LP("CUTLER" OR THE "FIRM") CONSENTED TO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT THE FIRM SUBMITTED MULTIPLEREQUEST FOR RESPONSES ("RFR") RESPONSES AT THE SAME PRICETHAT IN THE AGGREGATE EXCEEDED THE SIZE OF THE CUSTOMER BESTEXECUTION ("CUBE") ORDER OCCASIONS. THESE MULTIPLE RFRRESPONSES RESULTED FROM THE FIRM'S USE OF TWO MARKET DATAFEEDS TO PARTICIPATE IN THE CUBE AUCTION. THOSE MARKETDATA FEEDS EACH RECEIVED RFRS FROM NYSE AMERICAN FOR CUBEAUCTIONS AND IN TURN FORWARDED THE RFRS TO CUTLER'SQUOTING/ORDER ENTRY SYSTEM. BECAUSE CUTLER'S QUOTING/ORDERENTRY SYSTEM DID NOT RECOGNIZE THAT IT WAS RECEIVINGTWO RFRS FOR THE SAME CUBE AUCTION, IT SUBMITTED TWO RFRRESPONSES AT THE SAME PRICE THAT IN AGGREGATE EXCEEDEDTHE SIZE OF THE CUBE ORDER. THE FINDINGS STATED THAT CUTLER DIDNOT HAVE A SYSTEM OF COMPLIANCE AND SUPERVISORYCONTROLS AND WRITTEN COMPLIANCE AND SUPERVISORY POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVECOMPLIANCE. CUTLER DID NOT HAVE ANY WRITTEN SUPERVISORYPROCEDURES CONCERNING THE NYSE AMERICAN CUBE AUCTION.NOR DID THE FIRM HAVE SUPERVISORY CONTROLS IN PLACE TO REVIEWRFR RESPONSES SUBMITTED TO THE CUBE AUCTION,INCLUDING ANY CONTROLS TO DETECT AND PREVENT THE SUBMISSIONOF MULTIPLE RFR RESPONSES AT THE SAME PRICE THAT INAGGREGATE EXCEEDED THE CUBE ORDER SIZE.









Resolution:



Firm Statement IN RESOLVING THIS MATTER, NYSE REGULATION ALSO CONSIDERED THEREMEDIAL ACTIONS TAKEN BY THE FIRM. CUTLER NOW USESONE MARKET DATA FEED TO SEND RFRS TO ITS QUOTING/ORDER ENTRYSYSTEM IN ORDER TO LIMIT ITS RFR RESPONSES TO ONERESPONSE PROGRAMMED NOT TO EXCEED THE CUBE ORDER SIZE. INADDITION, CUTLER REVISED ITS WRITTEN SUPERVISORYPROCEDURES TO INCLUDE A DAILY SUPERVISORY REPORT TO REVIEWFOR MULTIPLE RFR RESPONSES AND FOR AGGREGATERESPONSES THAT EXCEED THE CUBE ORDER SIZE.



Disclosure 5 of 27

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Allegations: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, CUTLER GROUP, LP("CUTLER" OR "FIRM") CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, DOCUMENT, ANDMAINTAIN CONTROLS AND PROCEDURES REASONABLY DESIGNED TOPREVENT AND DETECT THE ENTRY OF ERRONEOUS OPTIONS QUOTESINTO THE MARKET.

THE FINDINGS STATED THAT CUTLER'S RISK MANAGEMENT CONTROLSAND SUPERVISORY PROCEDURES DID NOT REQUIRE TESTING A SCRIPTCHANGE IN A TRIAL ENVIRONMENT IF THE FIRM ALREADY USED, KNEW,OR TRUSTED THE SCRIPT, NOR DID THEY REQUIRE A QUOTING SYSTEMRESTART FOR SCRIPT CHANGES MADE ON AN INTRADAY BASIS.A MARKET MAKER AT CUTLER QUOTING IN SYMBOL WXYZ MADEINTRADAY CHANGES (HERE, A SPREAD INCREASE) TO A SCRIPT THE FIRMHAD USED PREVIOUSLY. THEREFORE, THE SCRIPT CHANGE AND FREEZELOGIC DID NOT NEED TO BE TESTED IN A TRIAL ENVIRONMENT ORREQUIRE A SYSTEM RESTART. BUT AFTER MAKING THE CHANGE, THEFREEZE LOGIC FAILED TO INITIALIZE AND PERFORM AS INTENDED WHENTHE SCRIPT WAS ACTIVATED AT THE OPENING OF THE MARKET. AS ARESULT OF THIS FAILURE, DURING A SPAN OF 79 SECONDS THATMORNING, THE FIRM SUBMITTED OVER 2.1 MILLION MESSAGES ACROSSUNDERLYING SERIES IN WXYZ. THE FIRM'S ERRONEOUS MESSAGINGACTIVITY DID NOT, HOWEVER, IMPACT WXYZ AS IT DID NOT RESULT IN ANYEXECUTIONS. NOTWITHSTANDING THE LACK OF MARKET IMPACT, IT WASUNREASONABLE FOR CUTLER TO NOT HAVE RISK MANAGEMENTCONTROLS AND SUPERVISORY PROCEDURES IN PLACE TO: (I) TEST ASCRIPT CHANGE IN A TRIAL ENVIRONMENT, EVEN IF THAT CHANGE WASTO A SCRIPT THE FIRM ALREADY USED, KNEW, OR TRUSTED; AND (II)REQUIRE A QUOTING SYSTEM RESTART AFTER THE FIRM MADE SCRIPTCHANGES ON AN INTRADAY BASIS.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH ANDMAINTAIN A SUPERVISORY SYSTEM AND WRITTEN SUPERVISORYPROCEDURES ("WSPS") REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH THE MARKET ACCESS RULE. AS DISCUSSED BELOW,THESE VIOLATIONS RELATE TO CUTLER'S: (I) FAILURES TO TEST CERTAINSCRIPT CHANGES IN A TRIAL ENVIRONMENT AND TO REQUIRE A SYSTEMRESTART AFTER MAKING SUCH CHANGES; AND (II) USE OF ANUNREASONABLY RESTRICTIVE EXCESSIVE QUOTING POST-TRADESURVEILLANCE.













Other Product Type(s): UNSPECIFIED SECURITIES

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, CUTLER GROUP, LP("CUTLER" OR "FIRM") CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, DOCUMENT, ANDMAINTAIN CONTROLS AND PROCEDURES REASONABLY DESIGNED TOPREVENT AND DETECT THE ENTRY OF ERRONEOUS OPTIONS QUOTESINTO THE MARKET.

THE FINDINGS STATED THAT CUTLER'S RISK MANAGEMENT CONTROLSAND SUPERVISORY PROCEDURES DID NOT REQUIRE TESTING A SCRIPTCHANGE IN A TRIAL ENVIRONMENT IF THE FIRM ALREADY USED, KNEW,OR TRUSTED THE SCRIPT, NOR DID THEY REQUIRE A QUOTING SYSTEMRESTART FOR SCRIPT CHANGES MADE ON AN INTRADAY BASIS.A MARKET MAKER AT CUTLER QUOTING IN SYMBOL WXYZ MADEINTRADAY CHANGES (HERE, A SPREAD INCREASE) TO A SCRIPT THE FIRMHAD USED PREVIOUSLY. THEREFORE, THE SCRIPT CHANGE AND FREEZELOGIC DID NOT NEED TO BE TESTED IN A TRIAL ENVIRONMENT ORREQUIRE A SYSTEM RESTART. BUT AFTER MAKING THE CHANGE, THEFREEZE LOGIC FAILED TO INITIALIZE AND PERFORM AS INTENDED WHENTHE SCRIPT WAS ACTIVATED AT THE OPENING OF THE MARKET. AS ARESULT OF THIS FAILURE, DURING A SPAN OF 79 SECONDS THATMORNING, THE FIRM SUBMITTED OVER 2.1 MILLION MESSAGES ACROSSUNDERLYING SERIES IN WXYZ. THE FIRM'S ERRONEOUS MESSAGINGACTIVITY DID NOT, HOWEVER, IMPACT WXYZ AS IT DID NOT RESULT IN ANYEXECUTIONS. NOTWITHSTANDING THE LACK OF MARKET IMPACT, IT WASUNREASONABLE FOR CUTLER TO NOT HAVE RISK MANAGEMENTCONTROLS AND SUPERVISORY PROCEDURES IN PLACE TO: (I) TEST ASCRIPT CHANGE IN A TRIAL ENVIRONMENT, EVEN IF THAT CHANGE WASTO A SCRIPT THE FIRM ALREADY USED, KNEW, OR TRUSTED; AND (II)REQUIRE A QUOTING SYSTEM RESTART AFTER THE FIRM MADE SCRIPTCHANGES ON AN INTRADAY BASIS.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH ANDMAINTAIN A SUPERVISORY SYSTEM AND WRITTEN SUPERVISORYPROCEDURES ("WSPS") REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH THE MARKET ACCESS RULE. AS DISCUSSED BELOW,THESE VIOLATIONS RELATE TO CUTLER'S: (I) FAILURES TO TEST CERTAINSCRIPT CHANGES IN A TRIAL ENVIRONMENT AND TO REQUIRE A SYSTEMRESTART AFTER MAKING SUCH CHANGES; AND (II) USE OF ANUNREASONABLY RESTRICTIVE EXCESSIVE QUOTING POST-TRADESURVEILLANCE.


Resolution:


No


Decision & Order of Offer of Settlement










Allegations: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, CUTLER GROUP, LP("CUTLER" OR "FIRM") CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOESTABLISH, DOCUMENT, ANDMAINTAIN CONTROLS AND PROCEDURES REASONABLY DESIGNED TOPREVENT AND DETECT THE ENTRY OFERRONEOUS OPTIONS QUOTES INTO THE MARKET. THE FINDINGS STATEDTHAT CUTLER'S RISK MANAGEMENTCONTROLS AND SUPERVISORY PROCEDURES DID NOT REQUIRE TESTINGA SCRIPT CHANGE IN A TRIALENVIRONMENT IF THE FIRM ALREADY USED, KNEW, OR TRUSTED THESCRIPT, NOR DID THEY REQUIRE AQUOTING SYSTEM RESTART FOR SCRIPT CHANGES MADE ON ANINTRADAY BASIS. A MARKET MAKER ATCUTLER QUOTING IN SYMBOL WXYZ MADE INTRADAY CHANGES (HERE, ASPREAD INCREASE) TO A SCRIPTTHE FIRM HAD USED PREVIOUSLY. THEREFORE, THE SCRIPT CHANGE ANDFREEZE LOGIC DID NOT NEED TOBE TESTED IN A TRIAL ENVIRONMENT OR REQUIRE A SYSTEM RESTART.BUT AFTER MAKING THE CHANGE, THEFREEZE LOGIC FAILED TO INITIALIZE AND PERFORM AS INTENDED WHENTHE SCRIPT WAS ACTIVATED AT THEOPENING OF THE MARKET. AS A RESULT OF THIS FAILURE, DURING A SPANOF 79 SECONDS THAT MORNING,THE FIRM SUBMITTED OVER 2.1 MILLION MESSAGES ACROSSUNDERLYING SERIES IN WXYZ. THE FIRM'SERRONEOUS MESSAGING ACTIVITY DID NOT, HOWEVER, IMPACT WXYZ ASIT DID NOT RESULT IN ANYEXECUTIONS. NOTWITHSTANDING THE LACK OF MARKET IMPACT, IT WASUNREASONABLE FOR CUTLER TONOT HAVE RISK MANAGEMENT CONTROLS AND SUPERVISORYPROCEDURES IN PLACE TO: (I) TEST A SCRIPTCHANGE IN A TRIAL ENVIRONMENT, EVEN IF THAT CHANGE WAS TO ASCRIPT THE FIRM ALREADY USED,KNEW, OR TRUSTED; AND (II) REQUIRE A QUOTING SYSTEM RESTARTAFTER THE FIRM MADE SCRIPTCHANGES ON AN INTRADAY BASIS. THE FINDINGS ALSO STATED THAT THEFIRM FAILED TO ESTABLISH ANDMAINTAIN A SUPERVISORY SYSTEM AND WRITTEN SUPERVISORYPROCEDURES ("WSPS") REASONABLYDESIGNED TO ENSURE COMPLIANCE WITH THE MARKET ACCESS RULE.AS DISCUSSED BELOW, THESEVIOLATIONS RELATE TO CUTLER'S: (I) FAILURES TO TEST CERTAIN SCRIPTCHANGES IN A TRIALENVIRONMENT AND TO REQUIRE A SYSTEM RESTART AFTER MAKINGSUCH CHANGES; AND (II) USE OF ANUNREASONABLY RESTRICTIVE EXCESSIVE QUOTING POST-TRADESURVEILLANCE.









Civil and Administrative Penalt(ies) /Fine(s)






WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, CUTLER GROUP, LP("CUTLER" OR "FIRM") CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOESTABLISH, DOCUMENT, ANDMAINTAIN CONTROLS AND PROCEDURES REASONABLY DESIGNED TOPREVENT AND DETECT THE ENTRY OFERRONEOUS OPTIONS QUOTES INTO THE MARKET. THE FINDINGS STATEDTHAT CUTLER'S RISK MANAGEMENTCONTROLS AND SUPERVISORY PROCEDURES DID NOT REQUIRE TESTINGA SCRIPT CHANGE IN A TRIALENVIRONMENT IF THE FIRM ALREADY USED, KNEW, OR TRUSTED THESCRIPT, NOR DID THEY REQUIRE AQUOTING SYSTEM RESTART FOR SCRIPT CHANGES MADE ON ANINTRADAY BASIS. A MARKET MAKER ATCUTLER QUOTING IN SYMBOL WXYZ MADE INTRADAY CHANGES (HERE, ASPREAD INCREASE) TO A SCRIPTTHE FIRM HAD USED PREVIOUSLY. THEREFORE, THE SCRIPT CHANGE ANDFREEZE LOGIC DID NOT NEED TOBE TESTED IN A TRIAL ENVIRONMENT OR REQUIRE A SYSTEM RESTART.BUT AFTER MAKING THE CHANGE, THEFREEZE LOGIC FAILED TO INITIALIZE AND PERFORM AS INTENDED WHENTHE SCRIPT WAS ACTIVATED AT THEOPENING OF THE MARKET. AS A RESULT OF THIS FAILURE, DURING A SPANOF 79 SECONDS THAT MORNING,THE FIRM SUBMITTED OVER 2.1 MILLION MESSAGES ACROSSUNDERLYING SERIES IN WXYZ. THE FIRM'SERRONEOUS MESSAGING ACTIVITY DID NOT, HOWEVER, IMPACT WXYZ ASIT DID NOT RESULT IN ANYEXECUTIONS. NOTWITHSTANDING THE LACK OF MARKET IMPACT, IT WASUNREASONABLE FOR CUTLER TONOT HAVE RISK MANAGEMENT CONTROLS AND SUPERVISORYPROCEDURES IN PLACE TO: (I) TEST A SCRIPTCHANGE IN A TRIAL ENVIRONMENT, EVEN IF THAT CHANGE WAS TO ASCRIPT THE FIRM ALREADY USED,KNEW, OR TRUSTED; AND (II) REQUIRE A QUOTING SYSTEM RESTARTAFTER THE FIRM MADE SCRIPTCHANGES ON AN INTRADAY BASIS. THE FINDINGS ALSO STATED THAT THEFIRM FAILED TO ESTABLISH ANDMAINTAIN A SUPERVISORY SYSTEM AND WRITTEN SUPERVISORYPROCEDURES ("WSPS") REASONABLYDESIGNED TO ENSURE COMPLIANCE WITH THE MARKET ACCESS RULE.AS DISCUSSED BELOW, THESEVIOLATIONS RELATE TO CUTLER'S: (I) FAILURES TO TEST CERTAIN SCRIPTCHANGES IN A TRIALENVIRONMENT AND TO REQUIRE A SYSTEM RESTART AFTER MAKINGSUCH CHANGES; AND (II) USE OF ANUNREASONABLY RESTRICTIVE EXCESSIVE QUOTING POST-TRADESURVEILLANCE.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $10,000.00



Disclosure 6 of 27

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT THE FIRM'SRISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES WERENOT REASONABLY DESIGNED TO MANAGE THE FINANCIAL, REGULATORY,AND OTHER RISKS ASSOCIATED WITH ITS BUSINESS ACTIVITY INVOLVINGMARKET ACCESS. THE FINDINGS STATED THAT THE FIRM DID NOTESTABLISH AND MAINTAIN WRITTEN PROCEDURES THAT WOULD ENABLEIT TO SUPERVISE PROPERLY THE ACTIVITIES OF ASSOCIATED PERSONSTO ASSURE COMPLIANCE WITH APPLICABLE SECURITIES RULES AND BZXEXCHANGE RULES. IN PARTICULAR, THE FIRM'S RISK MANAGEMENTCONTROLS AND SUPERVISORY PROCEDURES WERE NOT REASONABLYDESIGNED TO TIMELY DETECT AND PREVENT EXCESSIVE QUOTATIONMESSAGE ACTIVITY ON BZX EXCHANGE. AS A RESULT, IN 80 INSTANCESTHE FIRM GENERATED SURVEILLANCE ALERTS IN BZX EXCHANGE'SSYSTEMS FOR EXCESSIVE MESSAGING. THE FIRM'S CONTROLS ANDSUPERVISORY PROCEDURES REQUIRED BY SEC RULE 15C3-5(B) AND (C)WERE NOT REASONABLY DESIGNED. WITH RESPECT TO ONE QUOTINGPLATFORM, THE FIRM HAD NOT FULLY IMPLEMENTED ITS CONTROLS TOPREVENT EXCESSIVE MESSAGING ON BZX. WITH RESPECT TO A SECONDQUOTING PLATFORM, THE FIRM HAD NOT FULLY IMPLEMENTED ITSCONTROLS TO PREVENT EXCESSIVE MESSAGING ON BZX ORIMPLEMENTED RELEVANT EXCEPTION REPORTS DURING A PERIOD.







Initiated By: CBOE BZX EXCHANGE, INC.







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT THE FIRM'SRISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES WERENOT REASONABLY DESIGNED TO MANAGE THE FINANCIAL, REGULATORY,AND OTHER RISKS ASSOCIATED WITH ITS BUSINESS ACTIVITY INVOLVINGMARKET ACCESS. THE FINDINGS STATED THAT THE FIRM DID NOTESTABLISH AND MAINTAIN WRITTEN PROCEDURES THAT WOULD ENABLEIT TO SUPERVISE PROPERLY THE ACTIVITIES OF ASSOCIATED PERSONSTO ASSURE COMPLIANCE WITH APPLICABLE SECURITIES RULES AND BZXEXCHANGE RULES. IN PARTICULAR, THE FIRM'S RISK MANAGEMENTCONTROLS AND SUPERVISORY PROCEDURES WERE NOT REASONABLYDESIGNED TO TIMELY DETECT AND PREVENT EXCESSIVE QUOTATIONMESSAGE ACTIVITY ON BZX EXCHANGE. AS A RESULT, IN 80 INSTANCESTHE FIRM GENERATED SURVEILLANCE ALERTS IN BZX EXCHANGE'SSYSTEMS FOR EXCESSIVE MESSAGING. THE FIRM'S CONTROLS ANDSUPERVISORY PROCEDURES REQUIRED BY SEC RULE 15C3-5(B) AND (C)WERE NOT REASONABLY DESIGNED. WITH RESPECT TO ONE QUOTINGPLATFORM, THE FIRM HAD NOT FULLY IMPLEMENTED ITS CONTROLS TOPREVENT EXCESSIVE MESSAGING ON BZX. WITH RESPECT TO A SECONDQUOTING PLATFORM, THE FIRM HAD NOT FULLY IMPLEMENTED ITSCONTROLS TO PREVENT EXCESSIVE MESSAGING ON BZX ORIMPLEMENTED RELEVANT EXCEPTION REPORTS DURING A PERIOD.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $62,500. THE DECISION IN THISMATTER BECAME FINAL 20 BUSINESS DAYS AFTER THE ISSUANCE OF THEDECISION. THEREFORE, THE DECISION BECAME FINAL JANUARY 14, 2019.


No








Sanction Details: THE FIRM WAS CENSURED AND FINED $62,500. THE DECISION IN THISMATTER BECAME FINAL 20 BUSINESS DAYS AFTER THE ISSUANCE OF THEDECISION. THEREFORE, THE DECISION BECAME FINAL JANUARY 14, 2019.


Initiated By: CBOE BZX EXCHANGE, INC.







Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT THE FIRM'SRISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES WERENOT REASONABLY DESIGNED TO MANAGE THE FINANCIAL, REGULATORY,AND OTHER RISKS ASSOCIATED WITH ITS BUSINESS ACTIVITY INVOLVINGMARKET ACCESS. THE FINDINGS STATED THAT THE FIRM DID NOTESTABLISH AND MAINTAIN WRITTEN PROCEDURES THAT WOULD ENABLEIT TO SUPERVISE PROPERLY THE ACTIVITIES OF ASSOCIATED PERSONSTO ASSURE COMPLIANCE WITH APPLICABLE SECURITIES RULES AND BZXEXCHANGE RULES. IN PARTICULAR, THE FIRM'S RISK MANAGEMENTCONTROLS AND SUPERVISORY PROCEDURES WERE NOT REASONABLYDESIGNED TO TIMELY DETECT AND PREVENT EXCESSIVE QUOTATIONMESSAGE ACTIVITY ON BZX EXCHANGE. AS A RESULT, IN 80 INSTANCESTHE FIRM GENERATED SURVEILLANCE ALERTS IN BZX EXCHANGE'SSYSTEMS FOR EXCESSIVE MESSAGING. THE FIRM'S CONTROLS ANDSUPERVISORY PROCEDURES REQUIRED BY SEC RULE 15C3-5(B) AND (C)WERE NOT REASONABLY DESIGNED. WITH RESPECT TO ONE QUOTINGPLATFORM, THE FIRM HAD NOT FULLY IMPLEMENTED ITS CONTROLS TOPREVENT EXCESSIVE MESSAGING ON BZX. WITH RESPECT TO A SECONDQUOTING PLATFORM, THE FIRM HAD NOT FULLY IMPLEMENTED ITSCONTROLS TO PREVENT EXCESSIVE MESSAGING ON BZX ORIMPLEMENTED RELEVANT EXCEPTION REPORTS DURING A PERIOD.



Resolution: Acceptance, Waiver & Consent(AWC)








Sanction Details: THE FIRM WAS CENSURED AND FINED $62,500. THE DECISION IN THISMATTER WILL BECOME FINAL 20 BUSINESS DAYS AFTER THE ISSUANCEOF THE DECISION. THEREFORE, THIS DECISION WILL BECOME FINALJANUARY 14, 2019.


Disclosure 7 of 27

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Initiated By: CHICAGO BOARD OPTIONS EXCHANGE





Docket/Case Number: 17-0025/ 20160507127



Allegations: CUTLER RESPONDED TO 1,073 AIM AUCTIONS, RECEIVING EXECUTIONSON 94 CONTRACTS, IN OPTIONS CLASSES IN WHICH CUTLER DID NOTMAINTAIN AN APPOINTMENT. IN ADDITION, CUTLER FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE WRITTEN SUPERVISORY PROCEDURES, AND ASYSTEM FOR APPLYING SUCH PROCEDURES, REASONABLY DESIGNED TOPREVENT AND DETECT VIOLATIONS OF EXCHANGE RULE 6.74A.(VIOLATION OF EXCHANGE RULES 4.24 AND 6.74A)



Resolution:


Sanction Details: A $20,000 FINE AND A CENSURE.


Consent












Docket/Case Number: 17-0025/ 20160507127



Allegations: CUTLER RESPONDED TO 1,073 AIM AUCTIONS, RECEIVING EXECUTIONSON 94 CONTRACTS, IN OPTIONS CLASSES IN WHICH CUTLER DID NOTMAINTAIN AN APPOINTMENT. IN ADDITION, CUTLER FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE WRITTEN SUPERVISORY PROCEDURES, AND ASYSTEM FOR APPLYING SUCH PROCEDURES, REASONABLY DESIGNED TOPREVENT AND DETECT VIOLATIONS OF EXCHANGE RULE 6.74A.(VIOLATION OF EXCHANGE RULES 4.24 AND 6.74A)



Resolution:


Sanction Details: $20,000 FINE AND CENSURE


Consent

Disclosure 8 of 27

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Allegations: A FINRA HEARING OFFICER CONSIDERED AN OFFER OF SETTLEMENT ANDCONSENT ENTERED INTO BETWEEN FINRA ON BEHALF OF NYSEREGULATION, INC. AND THE FIRM.THE FIRM SUBMITTED AN OFFER OF SETTLEMENT AND CONSENT FORTHE SOLE PURPOSE OF SETTLING THIS DISCIPLINARY PROCEEDING,WITHOUT ADJUDICATION OF ANY ISSUES OF LAW OR FACT, AND WITHOUTADMITTING OR DENYING ANY ALLEGATIONS OR FINDINGS REFERRED TOIN THE OFFER OF SETTLEMENT.THE HEARING OFFICER ACCEPTS THE OFFER OF SETTLEMENT ANDCONSENT AND ISSUES THIS DECISION.THE FIRM VIOLATED NYSE ARCA OPTIONS RULE 11.1(B) BY FAILING TOADHERE TO THE PRINCIPLES OF GOOD BUSINESS PRACTICE IN THECONDUCT OF THE FIRM'S BUSINESS AFFAIRS, IN THAT, WHILE HAVINGPOSSESSION OF THE MATERIAL TERMS AND CONDITIONS OF A BLOCKORDER TO PURCHASE OPTIONS, A FIRM MARKET MAKER ENTEREDORDERS TO PURCHASE A RELATED SERIES OF OPTIONS.









Other


N/A




Other Product Type(s): EQUITIES SECURITIES OPTIONS

A FINRA HEARING OFFICER CONSIDERED AN OFFER OF SETTLEMENT ANDCONSENT ENTERED INTO BETWEEN FINRA ON BEHALF OF NYSEREGULATION, INC. AND THE FIRM.THE FIRM SUBMITTED AN OFFER OF SETTLEMENT AND CONSENT FORTHE SOLE PURPOSE OF SETTLING THIS DISCIPLINARY PROCEEDING,WITHOUT ADJUDICATION OF ANY ISSUES OF LAW OR FACT, AND WITHOUTADMITTING OR DENYING ANY ALLEGATIONS OR FINDINGS REFERRED TOIN THE OFFER OF SETTLEMENT.THE HEARING OFFICER ACCEPTS THE OFFER OF SETTLEMENT ANDCONSENT AND ISSUES THIS DECISION.THE FIRM VIOLATED NYSE ARCA OPTIONS RULE 11.1(B) BY FAILING TOADHERE TO THE PRINCIPLES OF GOOD BUSINESS PRACTICE IN THECONDUCT OF THE FIRM'S BUSINESS AFFAIRS, IN THAT, WHILE HAVINGPOSSESSION OF THE MATERIAL TERMS AND CONDITIONS OF A BLOCKORDER TO PURCHASE OPTIONS, A FIRM MARKET MAKER ENTEREDORDERS TO PURCHASE A RELATED SERIES OF OPTIONS.


Resolution:

Other Sanctions Ordered: AN UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, FINED $50,000, AND AN UNDERTAKING THATWITHIN 30 DAYS AFTER THE DATE OF THIS DECISION, CUTLER GROUPSHALL CERTIFY TO THE EXCHANGE THAT THE FIRM'S SUPERVISORYPROCEDURES HAVE BEEN UPDATED TO INCLUDE IMPLEMENTATION OFPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHEXCHANGE RULES, INCLUDING THOSE CITED IN THIS DECISION, BY MORESPECIFICALLY ADDRESSING THE OBLIGATIONS OF MARKET MAKERS ANDTRADERS WITH KNOWLEDGE OF THE TERMS AND CONDITIONS OF ANIMMINENT OPTION TRANSACTION PRIOR TO DISCLOSURE TO THEEXCHANGE TRADING CROWD.


No








THE FIRM WAS CENSURED, FINED $50,000, AND AN UNDERTAKING THATWITHIN 30 DAYS AFTER THE DATE OF THIS DECISION, CUTLER GROUPSHALL CERTIFY TO THE EXCHANGE THAT THE FIRM'S SUPERVISORYPROCEDURES HAVE BEEN UPDATED TO INCLUDE IMPLEMENTATION OFPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHEXCHANGE RULES, INCLUDING THOSE CITED IN THIS DECISION, BY MORESPECIFICALLY ADDRESSING THE OBLIGATIONS OF MARKET MAKERS ANDTRADERS WITH KNOWLEDGE OF THE TERMS AND CONDITIONS OF ANIMMINENT OPTION TRANSACTION PRIOR TO DISCLOSURE TO THEEXCHANGE TRADING CROWD.

Regulator Statement THE FIRM VIOLATED NYSE ARCA OPTIONS RULE 11.1(B) BY FAILING TOADHERE TO THE PRINCIPLES OF GOOD BUSINESS PRACTICE IN THECONDUCT OF THE FIRM'S BUSINESS AFFAIRS, IN THAT, WHILE HAVINGPOSSESSION OF THE MATERIAL TERMS AND CONDITIONS OF A BLOCKORDER TO PURCHASE OPTIONS, A FIRM MARKET MAKER ENTEREDORDERS TO PURCHASE A RELATED SERIES OF OPTIONS.


Initiated By: NYSE ARCA


Censure


UNDERTAKING TO WITHIN 30 DAYS AFTER THIS DECISION, CUTLER GROUPSHALL CERTIFY TO THE EXCHANGE THAT THE FIRM'S SUPERVISORYPROCEDURES HAVE BEEN UPDATED TO INCLUDE IMPLEMENTATION OFPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHEXCHANGE RULES, INCLUDING THOSE CITED IN THIS DECISION, BY MORESPECIFICALLY ADDRESSING THE OBLIGATIONS OF MARKET MAKERS ANDTRADERS WITH KNOWLEDGE OF THE TERMS AND CONDITIONS OF ANIMMINENT TRANSACTION PRIOR TO DISCLOSURE TO THE EXCHANGETRADING CROWD.



Principal Product Type: Unit Investment Trust(s)


Allegations: ON JULY 17, 2014, CUTLER GROUP VIOLATED NYSE ARCA OPTIONS RULE11.1(B) BY FAILING TO ADHERE TO THE PRINCIPLES OF GOOD BUSINESSPRACTICE IN THE CONDUCT OF THE FIRM'S BUSINESS AFFAIRS, IN THAT,WHILE HAVING POSSESSION OF THE MATERIAL TERMS AND CONDITIONSOF A BLOCK ORDER TO PURCHASE OPTIONS, A FIRM MARKET MAKERENTERED ORDERS TO PURCHASE A RELATED SERIES OF OPTIONS.



Resolution:








Other Sanctions Ordered: UNDERTAKING TO WITHIN 30 DAYS AFTER THIS DECISION, CUTLER GROUPSHALL CERTIFY TO THE EXCHANGE THAT THE FIRM'S SUPERVISORYPROCEDURES HAVE BEEN UPDATED TO INCLUDE IMPLEMENTATION OFPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHEXCHANGE RULES, INCLUDING THOSE CITED IN THIS DECISION, BY MORESPECIFICALLY ADDRESSING THE OBLIGATIONS OF MARKET MAKERS ANDTRADERS WITH KNOWLEDGE OF THE TERMS AND CONDITIONS OF ANIMMINENT TRANSACTION PRIOR TO DISCLOSURE TO THE EXCHANGETRADING CROWD.

Sanction Details: $50,000 TOTAL FINE TO BE PAID BY APPLICANT

Firm Statement UNDERTAKING TO WITHIN 30 DAYS AFTER THIS DECISION, CUTLER GROUPSHALL CERTIFY TO THE EXCHANGE THAT THE FIRM'S SUPERVISORYPROCEDURES HAVE BEEN UPDATED TO INCLUDE IMPLEMENTATION OFPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHEXCHANGE RULES, INCLUDING THOSE CITED IN THIS DECISION, BY MORESPECIFICALLY ADDRESSING THE OBLIGATIONS OF MARKET MAKERS ANDTRADERS WITH KNOWLEDGE OF THE TERMS AND CONDITIONS OF ANIMMINENT TRANSACTION PRIOR TO DISCLOSURE TO THE EXCHANGETRADING CROWD.


Disclosure 9 of 27

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Initiated By: NASDAQ PHLX LLC





Allegations: THE BUSINESS CONDUCT COMMITTEE ("COMMITTEE"), PURSUANT TORULE 960.2(F) OF THE RULES OF THE NASDAQ PHLX LLC ("EXCHANGERULES") AND UPON INFORMATION AND BELIEF, HEREBY AUTHORIZES THEISSUANCE OF THIS STATEMENT OF CHARGES AND ALLEGES.IN 19 INSTANCES ON 13 TRADE DATES, THE FIRM, WHILE ACTING AS AREMOTE STREAMING QUOTE TRADERS (RSQT), FAILED TO DISSEMINATECONTINUOUS, TWO-SIDED QUOTATIONS IN AT LEAST 60 PERCENT OF THEOPTIONS SERIES IN WHICH IT WAS ASSIGNED FOR AT LEAST 90 PERCENTOF THE TRADING DAY. BY ENGAGING IN THE ACTS, PRACTICES ANDCONDUCT THE FIRM VIOLATED EXCHANGE RULE 1014(B)(II)(D)(1).











Resolution:


Sanction Details: THE FIRM IS CENSURED AND FINED $42,500.IF RESPONDENT FAILS TO PAY THE FINE WITHIN 30 CALENDAR DAYS OFTHE DATE OF THIS DECISION, OR FAILS TO COMPLY WITH ANY OTHERSANCTION BY THE DATE SET FORTH HEREIN, THE COMMITTEE SHALLDECLARE RESPONDENT TO BE IN MATERIAL BREACH OF ITS AGREEMENTAND MAY TAKE WHATEVER ACTIONS IT DEEMS NECESSARY TO RESPONDTO THE BREACH, INCLUDING, BUT NOT LIMITED TO, RESCINDING THISDECISION AND ALLOWING THE MATTER TO PROCEED IN ACCORDANCEWITH PHLX RULES 960.1 THROUGH 960.12.

Regulator Statement THE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS, AND THE BUSINESS CONDUCT COMMITTEE("COMMITTEE") OF NASDAQ PHLX LLC ("PHLX") RENDERED THE DECISIONIN THE MATTER.RESPONDENT AGREES THAT THE DECISION TO BE ISSUED SHALL BEFINAL, AND WAIVES ANY RIGHT TO A REVIEW OF THE DECISION OR ANYOTHER PHASE OR ASPECT OF THIS PROCEEDING BY THE BOARD OFDIRECTORS OF THE EXCHANGE; BY THE U.S. SECURITIES AND EXCHANGECOMMISSION; BY ANY FEDERAL OR STATE COURT; OR IN ANY OTHERFORUM OR BY ANY OTHER MEANS.THE COMMITTEE ACCEPTS THE FOREGOING STIPULATION OF FACTS, ANDON THE BASIS THEREOF FINDS THAT RESPONDENT VIOLATED PHLXRULES 1014(B)(II)(D)(1).

THE COMMITTEE BELIEVES THAT THE SANCTIONS PROPOSED BYRESPONDENT IN ITS OFFER SERVE THE PUBLIC INTEREST, ARESUFFICIENTLY REMEDIAL UNDER THE CIRCUMSTANCES, AND REPRESENTA PROPER DISCHARGE OF THE (PHLX'S) EXCHANGE'S REGULATORYRESPONSIBILITIES UNDER THE EXCHANGE ACT OF 1934.(ASSOCIATED CASE PHLX ENFORCEMENT # 2016-08 AND FINRA CASE20150467227 AND 20160497816)


No


Decision






THE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS, AND THE BUSINESS CONDUCT COMMITTEE("COMMITTEE") OF NASDAQ PHLX LLC ("PHLX") RENDERED THE DECISIONIN THE MATTER.RESPONDENT AGREES THAT THE DECISION TO BE ISSUED SHALL BEFINAL, AND WAIVES ANY RIGHT TO A REVIEW OF THE DECISION OR ANYOTHER PHASE OR ASPECT OF THIS PROCEEDING BY THE BOARD OFDIRECTORS OF THE EXCHANGE; BY THE U.S. SECURITIES AND EXCHANGECOMMISSION; BY ANY FEDERAL OR STATE COURT; OR IN ANY OTHERFORUM OR BY ANY OTHER MEANS.THE COMMITTEE ACCEPTS THE FOREGOING STIPULATION OF FACTS, ANDON THE BASIS THEREOF FINDS THAT RESPONDENT VIOLATED PHLXRULES 1014(B)(II)(D)(1).

THE COMMITTEE BELIEVES THAT THE SANCTIONS PROPOSED BYRESPONDENT IN ITS OFFER SERVE THE PUBLIC INTEREST, ARESUFFICIENTLY REMEDIAL UNDER THE CIRCUMSTANCES, AND REPRESENTA PROPER DISCHARGE OF THE (PHLX'S) EXCHANGE'S REGULATORYRESPONSIBILITIES UNDER THE EXCHANGE ACT OF 1934.(ASSOCIATED CASE PHLX ENFORCEMENT # 2016-08 AND FINRA CASE20150467227 AND 20160497816)


Initiated By: NASDAQ


Other



Docket/Case Number: 2016-08 / 20140432136 / 20150467227 / 20160497816



Allegations: ON JULY 16, 2016, THE BUSINESS CONDUCT COMMITTEE (THE "COMMITTEE") OF THE NASDAQ PHLX LLC ("PHLX" OR THE "EXCHANGE")ISSUED A DISCIPLINARY DECISION AGAINST CUTLER GROUP, LP ("CTLR"OR THE "FIRM"), A MEMBER ORGANIZATION OF THE EXCHANGE. INRESPONSE TO A STATEMENT OF CHARGES ISSUED IN THIS ACTION, CTLRSUBMITTED AN OFFER OF SETTLEMENT. SOLELY TO SETTLE THISPROCEEDING, AND WITHOUT ADMITTING OR DENYING THE CHARGES,CTLR CONSENTED TO FINDINGS THAT DURING THE PERIOD BETWEENAUGUST 2014 AND NOVEMBER 2015, THE FIRM VIOLATED EXCHANGERULE 1014(B)(II)(D)(1). SPECIFICALLY, IN 19 INSTANCES ON 13 TRADEDATES BETWEEN AUGUST 2014 AND NOVEMBER 2015, WHILE ACTING AS AREMOTE STREAMING QUOTE TRADER, CTLR FAILED TO DISSEMINATECONTINUOUS, TWO-SIDED-QUOTATIONS IN AT LEAST 60 PERCENT OF THEOPTIONS SERIES IN WHICH IT WAS ASSIGNED FOR AT LEAST 90 PERCENTOF THE TRADING DAY.



Resolution:










Sanction Details: $42,500 TOTAL FINE TO BE PAID BY APPLICANT.

Firm Statement THE COMMITTEE FOUND THAT CTLR HAD VIOLATED EXCHANGE RULE1014(B)(II)(D)(1) AND ORDERED THE IMPOSITION OF THE FOLLOWINGSANCTIONS AGAINST CTLR: (I) A CENSURE; AND (II) A FINE IN THE AMOUNTOF $42,500.

Disclosure 10 of 27

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Other


N/A





Allegations: A HEARING OFFICER AT THE FINANCIAL INDUSTRY REGULATORYAUTHORITY (FINRA) CONSIDERED AN OFFER OF SETTLEMENT ANDCONSENT ENTERED INTO BETWEEN FINRA'S DEPARTMENT OF MARKETREGULATION ON BEHALF OF NYSE REGULATION, INC. AND CUTLERGROUP, LP. THE OFFER OF SETTLEMENT AND CONSENT WAS SUBMITTEDFOR THE SOLE PURPOSE OF SETTLING THIS DISCIPLINARY PROCEEDING,WITHOUT ADJUDICATION OF ANY ISSUES OF LAW OR FACT, AND WITHOUTADMITTING OR DENYING ANY ALLEGATIONS OR FINDINGS REFERRED TOTHEREIN. THE HEARING OFFICER ACCEPTS THE OFFER OF SETTLEMENTAND CONSENT AND ISSUES THIS DECISION IN ACCORDANCE WITH NYSEARCA EQUITIES RULES. DURING THE REVIEW PERIOD, THE FIRM FAILEDTO POPULATE APPROXIMATELY 754,101 ORDERS INTO THE NYSE ARCAMARKETPLACE WITH THE CORRECT CAPACITY CODE TO IDENTIFY THEORDERS AS PROPRIETARY ORDERS, IN VIOLATION OF NYSE ARCAEQUITIES RULE 7.33.



Resolution:


No

Decision








Regulator Statement IN DETERMINING TO RESOLVE THIS MATTER ON THE TERMS SET FORTH INTHE OFFER OF SETTLEMENT AND CONSENT, MARKET REGULATION TOOKINTO CONSIDERATION THAT NO MARKET IMPACT OR HARM TO OTHERMARKET PARTICIPANTS OR CUSTOMERS RESULTED FROM CUTLERGROUP'S VIOLATIONS, AND THAT THE FIRM PROMPTLY ENHANCED ITSSYSTEMS AND SUPERVISORY PROCEDURES TO ENSURE CORRECTMARKING OF ITS PROPRIETARY ORDERS SENT TO THE NYSE ARCAMARKETPLACE UPON NOTICE FROM FINRA THAT IT HAD NOT PROPERLYCODED ITS NYSE ARCA EQUITIES PROPRIETARY ORDERS.


No





Other






Allegations: DURING THE REVIEW PERIOD, THE FIRM FAILED TO POPULATEAPPROXIMATELY 754,101 ORDERS INTO THE NYSE ARCA MARKETPLACEWITH THE CORRECT CAPACITY CODE TO IDENTIFY THE ORDERS ASPROPRIETARY ORDERS IN VIOLATION OF NYSE ARCA EQUITIES RULE 7.33



Resolution: Decision








Sanction Details: CUTLER GROUP LP IS CENSURED AND FINED $7,500


Disclosure 11 of 27

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Docket/Case Number: 15-0032 / 20150444779



Allegations: CUTLER GROUP, LP ("CUTLER"), AN EXCHANGE TPH ORGANIZATION, WASCENSURED AND FINED $17,500 FOR THE FOLLOWING CONDUCT. CUTLER(I) FAILED TO REGISTER AND QUALIFY THE MINIMUM NUMBER OFPROPRIETARY TRADER PRINCIPALS (TP) WITH THE EXCHANGE INWEBCRD BY NOVEMBER 5, 2011; (II) FAILED TO QUALIFY AND REGISTERITS CHIEF EXECUTIVE OFFICER AS A PROPRIETARY TRADER PRINCIPAL(TP) BY NOVEMBER 5, 2011, AND FROM NOVEMBER 5, 2011 THROUGH ONOR ABOUT NOVEMBER 30, 2011, CUTLER FAILED TO REGISTER ITS CHIEFEXECUTIVE OFFICER WITH THE PREREQUISITE PROPRIETARY TRADER(PT) REGISTRATION WITH THE EXCHANGE IN WEBCRD; (III) FAILED TOREGISTER ITS TRADING SUPERVISOR AS A PROPRIETARY TRADERPRINCIPAL (TP) WITH THE EXCHANGE IN WEBCRD BY NOVEMBER 5, 2011,AND FROM NOVEMBER 5, 2011 THROUGH ON OR ABOUT DECEMBER 13,2011, CUTLER FAILED TO REGISTER ITS TRADING SUPERVISOR WITH THEPREREQUISITE PROPRIETARY TRADER (PT) REGISTRATION WITH THEEXCHANGE IN WEBCRD; AND (IV) FROM ON OR ABOUT OCTOBER 6, 2009THROUGH ON OR ABOUT NOVEMBER 21, 2012, CUTLER FAILED TOREGISTER ITS FINANCIAL AND OPERATIONS PRINCIPAL AS AFINANCIAL/OPERATIONS PRINCIPAL (FN) WITH THE EXCHANGE INWEBCRD. (EXCHANGE RULE 3.6A - QUALIFICATION AND REGISTRATION OFTRADING PERMIT HOLDERS AND ASSOCIATED PERSONS)









Resolution:




Consent






Docket/Case Number: 15-0032



Allegations: CUTLER FAILED TO REGISTER AND QUALIFY THE MINIMUM NUMBER OFPROPRIETARY PRINCIPALS(TP) WITH THE EXCHANGE IN WEBCRD BYNOVEMBER 5, 2011. CUTLER FAILED TO QUALIFY AND REGISTER ITS CHIEFEXECUTIVE OFFICER AS A PROPRIETARY TRADING PRINCIPAL(TP) BYNOVEMBER 5, 2011, AND FROM NOVEMBER 5, 2011 THROUGH ON ORABOUT NOVEMBER 30, 2011, CUTLER FAILED TO REGISTER ITS CHIEFEXECUTIVE OFFICER WITH THE PREREQUISITE PROPRIETARYTRADER(PT) REGISTRATION WITH THE EXCHANGE IN WEBCRD. CUTLERFAILED TO REGISTER ITS TRADING SUPERVISOR AS A PROPRIETARYTRADER PRINCIPAL(TP) WITH THE EXCHANGE IN WEBCRD BY NOVEMBER5, 2011, AND FROM NOVEMBER 5, 2011 THROUGH ON OR ABOUTDECEMBER 13, 2011. CUTLER FAILED TO REGISTER ITS TRADINGSUPERVISOR WITH THE PREREQUISITE PROPRIETARYTRADER(PT)REGISTRATION WITH THE EXCHANGE IN WEBCRD. FROM ONOR ABOUT OCTOBER 6, 2009 THROUGH ON OR ABOUT NOVEMBER 21,2012, CUTLER FAILED TO REGISTER ITS FINANCIAL/OPERATIONSPRINCIPAL (FN) WITH THE EXCHANGE IN WEBCRD.









Resolution:


Sanction Details: $17,500 FINE AND CENSURE


Decision

Disclosure 12 of 27

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Allegations: CUTLER GROUP, LP ("CUTLER"), AN EXCHANGE TPH ORGANIZATION, WASCENSURED AND FINED $15,000 FOR THE FOLLOWING CONDUCT. CUTLER(I) RESPONDED TO 69 COMPLEX ORDER AUCTIONS IN OPTIONS CLASSESIN WHICH CULTER DID NOT HOLD THE RELEVANT APPOINTMENT; (II)RESPONDED TO 364 AUTOMATED IMPROVEMENT MECHANISM AUCTIONS,RECEIVING EXECUTION ON 363 CONTRACTS, IN OPTIONS CLASSES INWHICH THE FIRM DID NOT HOLD THE RELEVANT APPOINTMENT; (III) FAILEDTO SUPERVISE ITS ASSOCIATED PERSONS TO ASSURE THAT THE FIRMHELD APPOINTMENTS IN THE RELEVANT OPTIONS CLASSES PRIOR TORESPONDING TO EXCHANGE AUCTIONS; AND (IV) FAILED TO ESTABLISH,DOCUMENT, AND MAINTAIN A SYSTEM OF RISK MANAGEMENT CONTROLSAND SUPERVISORY PROCEDURES REASONABLY DESIGNED TO MANAGETHE FINANCIAL, REGULATORY, AND OTHER RISKS OF THE FIRM'SBUSINESS. SPECIFICALLY, CUTLER FAILED TO HAVE WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ASSURECOMPLIANCE WITH THE REGULATORY REQUIREMENT THAT CUTLERMAINTAIN APPOINTMENTS IN OPTIONS CLASSES PRIOR TO RESPONDINGTO EXCHANGE AUCTIONS IN THOSE OPTIONS CLASSES. (EXCHANGERULES 4.2 - ADHERENCE TO LAW, 6.53C - COMPLEX ORDERS ON THEHYBRID SYSTEM, 6.74A - AUTOMATED IMPROVEMENT MECHANISM (AIM);AND RULE 15C3-5 - RISK MANAGEMENT CONTROLS FOR BROKERS ORDEALERS WITH MARKET ACCESS, PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT"))













Resolution:




Consent



Allegations: CUTLER GROUP, LP ("CUTLER"), AN EXCHANGE TPH ORGANIZATION, WASCENSURED AND FINED $15,000 FOR THE FOLLOWING CONDUCT. CUTLER(I) RESPONDED TO 69 COMPLEX ORDER AUCTIONS IN OPTIONS CLASSESIN WHICH CULTER DID NOT HOLD THE RELEVANT APPOINTMENT; (II)RESPONDED TO 364 AUTOMATED IMPROVEMENT MECHANISM AUCTIONS,RECEIVING EXECUTION ON 363 CONTRACTS, IN OPTIONS CLASSES INWHICH THE FIRM DID NOT HOLD THE RELEVANT APPOINTMENT; (III) FAILEDTO SUPERVISE ITS ASSOCIATED PERSONS TO ASSURE THAT THE FIRMHELD APPOINTMENTS IN THE RELEVANT OPTIONS CLASSES PRIOR TORESPONDING TO EXCHANGE AUCTIONS; AND (IV) FAILED TO ESTABLISH,DOCUMENT, AND MAINTAIN A SYSTEM OF RISK MANAGEMENT CONTROLSAND SUPERVISORY PROCEDURES REASONABLY DESIGNED TO MANAGETHE FINANCIAL, REGULATORY, AND OTHER RISKS OF THE FIRM'SBUSINESS. SPECIFICALLY, CUTLER FAILED TO HAVE WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ASSURECOMPLIANCE WITH THE REGULATORY REQUIREMENT THAT CUTLERMAINTAIN APPOINTMENTS IN OPTIONS CLASSES PRIOR TO RESPONDINGTO EXCHANGE AUCTIONS IN THOSE OPTIONS CLASSES. (EXCHANGERULES 4.2 - ADHERENCE TO LAW, 6.53C - COMPLEX ORDERS ON THEHYBRID SYSTEM, 6.74A - AUTOMATED IMPROVEMENT MECHANISM (AIM);AND RULE 15C3-5 - RISK MANAGEMENT CONTROLS FOR BROKERS ORDEALERS WITH MARKET ACCESS, PROMULGATED UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT"))
















Resolution:




Consent

Disclosure 13 of 27

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Reporting Source: Firm

Allegations: IN FEBRUARY 2012 AND IN OR ABOUT AUGUST 2012, CUTLER RESPONDEDTO A TOTAL OF 69 COA AUCTIONS IN OPTIONS CLASSES IN WHICH THEFIRM DID NOT HOLD THE RELEVANT APPOINTMENT. FROM IN OR ABOUTNOVEMBER 2011 THROUGH IN OR ABOUT OCTOBER 2013 CUTLERRESPONDED TO 364 AIM AUCTIONS RECEIVING EXECUTION ON 363CONTRACTS, IN OPTIONS CLASSES IN WHICH THE FIRM DID NOT HOLDTHE RELEVANT APPOINTMENT. FROM IN OR ABOUT NOVEMBER 2011THOUGH OCTOBER 2013, CUTLER FAILED TO SUPERVISE ITS ASSOCIATEDPERSONS TO ASSURE THE FIRM HELD APPOINTMENTS IN RELEVANTOPTIONS CLASSES PRIOR TO RESPONDING TO EXCHANGE AUCTIONS.FROM IN OR ABOUT NOVEMBER 2011 THROUGH OCTOBER 2013, CUTLERFAILED TO ESTABLISH, DOCUMENT, AND MAINTAIN A SYSTEM OF RISKMANAGEMENT CONTROLS AND SUPERVISORY PROCEDURESREASONABLY DESIGNED TO MANAGE THE FINANCIAL, REGULATORY, ANDOTHER RISKS OF THE FIRM'S BUSINESS. SPECIFICALLY, CUTLER FAILEDTO HAVE WRITTEN SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO ASSURE COMPLIANCE WITH THE REGULATORY REQUIREMENT THATCUTLER MAINTAIN APPOINTMENTS IN OPTIONS CLASSES PRIOR TORESPONDING TO EXCHANGE AUCTIONS IN THOSE OPTIONS CLASSES.







Initiated By: CHICAGO BOARD OF EXCHANGE


Other






IN FEBRUARY 2012 AND IN OR ABOUT AUGUST 2012, CUTLER RESPONDEDTO A TOTAL OF 69 COA AUCTIONS IN OPTIONS CLASSES IN WHICH THEFIRM DID NOT HOLD THE RELEVANT APPOINTMENT. FROM IN OR ABOUTNOVEMBER 2011 THROUGH IN OR ABOUT OCTOBER 2013 CUTLERRESPONDED TO 364 AIM AUCTIONS RECEIVING EXECUTION ON 363CONTRACTS, IN OPTIONS CLASSES IN WHICH THE FIRM DID NOT HOLDTHE RELEVANT APPOINTMENT. FROM IN OR ABOUT NOVEMBER 2011THOUGH OCTOBER 2013, CUTLER FAILED TO SUPERVISE ITS ASSOCIATEDPERSONS TO ASSURE THE FIRM HELD APPOINTMENTS IN RELEVANTOPTIONS CLASSES PRIOR TO RESPONDING TO EXCHANGE AUCTIONS.FROM IN OR ABOUT NOVEMBER 2011 THROUGH OCTOBER 2013, CUTLERFAILED TO ESTABLISH, DOCUMENT, AND MAINTAIN A SYSTEM OF RISKMANAGEMENT CONTROLS AND SUPERVISORY PROCEDURESREASONABLY DESIGNED TO MANAGE THE FINANCIAL, REGULATORY, ANDOTHER RISKS OF THE FIRM'S BUSINESS. SPECIFICALLY, CUTLER FAILEDTO HAVE WRITTEN SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO ASSURE COMPLIANCE WITH THE REGULATORY REQUIREMENT THATCUTLER MAINTAIN APPOINTMENTS IN OPTIONS CLASSES PRIOR TORESPONDING TO EXCHANGE AUCTIONS IN THOSE OPTIONS CLASSES.


Resolution:


Sanction Details: $15,000 FINE AND CENSURE.


Decision

Disclosure 14 of 27

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Initiated By: NASDAQ OMX PHLX, INC.






Allegations: DURING THE REVIEW PERIOD, RESPONDENT, ACTING AS A REMOTESTREAMING QUOTE TRADER FAILED TO QUOTE CONTINUOUSLY, TWO-SIDED MARKETS IN MULTIPLE OPTIONS, THEREBY RESULTING IN 11,376FAILURES TO QUOTE IN AT LEAST 60% OF THE SERIES IN THOSE OPTIONSAND FAILED TO QUOTE THE SERIES DURING THAT PERIOD.









Resolution:


Sanction Details: $20,000 FINE WAS LEVIED AGAINST THE FIRM.


Decision

Disclosure 15 of 27

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Initiated By: NASDAQ STOCK MARKET





Principal Product Type: No Product


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT PERMITTEDONE OF ITS RISK MANAGERS/TRADING SUPERVISORS TO ENGAGE IN THEACTIVE SUPERVISION OF THE FIRM'S SECURITIES BUSINESS WITHOUTAPPROPRIATE REGISTRATION. THE INDIVIDUAL PROVIDED SUPERVISORYREVIEW ON BEHALF OF THE FIRM FOR ITS NASDAQ TRADING ACTIVITY. ATTHE TIME THE INDIVIDUAL PROVIDED THESE SUPERVISORY REVIEWS, HEWAS NOT REGISTERED WITH FINRA IN ANY PRINCIPAL CAPACITY. BYFAILING TO ENSURE THAT THE INDIVIDUAL WAS APPROPRIATELYREGISTERED BEFORE ENGAGING IN SUCH ACTIVITY OF THE FIRM'SSECURITIES BUSINESS, THE FIRM VIOLATED NASDAQ RULE 1021.



Resolution:


No








Sanction Details: SEE ABOVE


No



Initiated By: NASDAQ STOCK MARKET







Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT PERMITTEDONE OF ITS RISK MANAGERS/TRADING SUPERVISORS TO ENGAGE IN THEACTIVE SUPERVISION OF THE FIRM'S SECURITIES BUSINESS WITHOUTAPPROPRIATE REGISTRATION. THE INDIVIDUAL PROVIDED SUPERVISORYREVIEW ON BEHALF OF THE FIRM FOR ITS NASDAQ TRADING ACTIVITY. ATTHE TIME THE INDIVIDUAL PROVIDED THESE SUPERVISORY REVIEWS, HEWAS NOT REGISTERED WITH FINRA IN ANY PRINCIPAL CAPACITY. BYFAILING TO ENSURE THAT THE INDIVIDUAL WAS APPROPRIATELYREGISTERED BEFORE ENGAGING IN SUCH ACTIVITY OF THE FIRM'SSECURITIES BUSINESS, THE FIRM VIOLATED NASDAQ RULE 1021.



Resolution:











Disclosure 16 of 27

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Allegations: A FINRA HEARING OFFICER CONSIDERED AN OFFER OF SETTLEMENT ANDCONSENT ENTERED INTO BETWEEN FINRA ON BEHALF OF NYSEREGULATION, INC. AND THE FIRM. WITHOUT ADMITTING OR DENYING ANYALLEGATIONS OR FINDINGS, THE HEARING OFFICER ACCEPTED THEOFFER OF SETTLEMENT AND CONSENT AND ISSUED A DECISION. THEFIRM FAILED TO MARK 16 SELL ORDERS AS SHORT. ACCORDINGLY, THEFIRM VIOLATED RULE 200(G) OF REGULATION SHO OF THE EXCHANGEACT.



Resolution:


Sanction Details: SEE ABOVE FOR SANCTION DETAILS -

THE FINE MUST BE PAID WITHIN 30 DAYS OF THE DATE OF THIS DECISIONOR THE FIRM MAY FACE SUSPENSION, PURSUANT TO THE TERMS OF THEDECISION AND NYSE ARCA EQUITIES RULE 11.2(A)(2)(II).


No








Sanction Details: SEE ABOVE FOR SANCTION DETAILS -

THE FINE MUST BE PAID WITHIN 30 DAYS OF THE DATE OF THIS DECISIONOR THE FIRM MAY FACE SUSPENSION, PURSUANT TO THE TERMS OF THEDECISION AND NYSE ARCA EQUITIES RULE 11.2(A)(2)(II).




Other






Allegations: A FINRA HEARING OFFICER CONSIDERED AN OFFER OF SETTLEMENT ANDCONSENT ENTERED INTO BETWEEN FINRA ON BEHALF OF NYSEREGULATION, INC. AND THE FIRM. WITHOUT ADMITTING OR DENYING ANYALLEGATIONS OR FINDINGS, THE HEARING OFFICER ACCEPTED THEOFFER OF SETTLEMENT AND CONSENT AND ISSUED A DECISION. THEFIRM FAILED TO MARK 16 SELL ORDERS AS SHORT. ACCORDINGLY, THEFIRM VIOLATED RULE 200(G) OF REGULATION SHO OF THE EXCHANGEACT.



Resolution:


Sanction Details: SEE ABOVE FOR SANCTION DETAILS - THE FINE MUST BE PAID WITHIN 30DAYS OF THE DATE OF THIS DECISION OR THE FIRM MAY FACESUSPENSION, PURSUANT TO THE TERMS OF THE DECISION AND NYSEARCA EQUITIES RULE 11.2(A)(2)(II).



Disclosure 17 of 27

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Disclosure 17 of 27









Allegations: NASDAQ OMX PHLX EXCHANGE RULE 748 AND SECURITIES EXCHANGEACT OF 1934 RULES 15C3-5(B) AND 15C3-5(C)(2): THE FIRM REPEATEDLYTRANSMITTED AN EXCESSIVE NUMBER OF QUOTES AND MESSAGES TOTHE EXCHANGE IN MULTIPLE SYMBOLS. ALTHOUGH THE FIRM CREATEDAND SUBSEQUENTLY IMPROVED THE PARAMETERS OF AN INTERNALEXCEPTION REPORT, IT FAILED TO PREVENT EXCESSIVE QUOTING. THEFIRM TRANSMITTED EXCESSIVE QUOTES DURING 60-MINUTE INTERVALSIN AT LEAST 775 INSTANCES, AND IN NEARLY EVERY INSTANCETRANSMITTED HUNDREDS OF THOUSANDS OF QUOTES IN THE SAMEOPTIONS SERIES WITHIN AN HOUR. ALTHOUGH THE FIRM CLAIMED THATIT HAD TAKEN CORRECTIVE ACTION TO PREVENT EXCESSIVE QUOTINGBY MODIFYING THE QUOTING SCRIPTS IN ITS ALGORITHMS, ANDIMPLEMENTED A DAILY EXCEPTION REPORT TO IDENTIFY INSTANCES OFEXCESSIVE QUOTING, ITS PROBLEMS CONTINUED. DESPITE TAKINGADDITIONAL REMEDIAL STEPS TO ADDRESS ITS EXCESSIVE QUOTINGISSUES, THE FIRM'S PROBLEMS CONTINUED. AS A RESULT, CUTLERFAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES, AND A REASONABLE SYSTEM OF FOLLOW-UP AND REVIEW,DESIGNED TO PREVENT AND DETECT EXCESSIVE MESSAGE TRAFFIC ANDQUOTES IN REAL TIME.



Resolution:


No

Decision






Other Sanctions Ordered: $230,000 OF THE FINE SHALL BE PAID TO NASDAQ OMX PHLX LLC

Sanction Details: THE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS. THE BUSINESS CONDUCT COMMITTEEREVIEWED THE OFFER TO BE ENTERED INTO BETWEEN THE FIRM ANDTHE EXCHANGE IN THIS MATTER AND BY VOTE ACCEPTED SAID OFFER.

Regulator Statement ASSOCIATED CASES: ENFORCEMENT NO. 2014-02; FINRA NO.20110302026/20130369180


No






Allegations: NASDAQ OMX PHLX EXCHANGE RULE 748 AND SECURITIES EXCHANGEACT OF 1934 RULES 15C3-5(B) AND 15C3-5(C)(2): THE FIRM REPEATEDLYTRANSMITTED AN EXCESSIVE NUMBER OF QUOTES AND MESSAGES TOTHE EXCHANGE IN MULTIPLE SYMBOLS. ALTHOUGH THE FIRM CREATEDAND SUBSEQUENTLY IMPROVED THE PARAMETERS OF AN INTERNALEXCEPTION REPORT, IT FAILED TO PREVENT EXCESSIVE QUOTING. THEFIRM TRANSMITTED EXCESSIVE QUOTES DURING 60-MINUTE INTERVALSIN AT LEAST 775 INSTANCES, AND IN NEARLY EVERY INSTANCETRANSMITTED HUNDREDS OF THOUSANDS OF QUOTES IN THE SAMEOPTIONS SERIES WITHIN AN HOUR. ALTHOUGH THE FIRM CLAIMED THATIT HAD TAKEN CORRECTIVE ACTION TO PREVENT EXCESSIVE QUOTINGBY MODIFYING THE QUOTING SCRIPTS IN ITS ALGORITHMS, ANDIMPLEMENTED A DAILY EXCEPTION REPORT TO IDENTIFY INSTANCES OFEXCESSIVE QUOTING, ITS PROBLEMS CONTINUED. DESPITE TAKINGADDITIONAL REMEDIAL STEPS TO ADDRESS ITS EXCESSIVE QUOTINGISSUES, THE FIRM'S PROBLEMS CONTINUED. AS A RESULT, CUTLERFAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES, AND A REASONABLE SYSTEM OF FOLLOW-UP AND REVIEW,DESIGNED TO PREVENT AND DETECT EXCESSIVE MESSAGE TRAFFIC ANDQUOTES IN REAL TIME.













Resolution:

Other Sanctions Ordered: $230,000 OF THE FINE SHALL BE PAID TO NASDAQ OMX PHLX LLC

Sanction Details: THE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS. THE BUSINESS CONDUCT COMMITTEEREVIEWED THE OFFER TO BE ENTERED INTO BETWEEN THE FIRM ANDTHE EXCHANGE IN THIS MATTER AND BY VOTE ACCEPTED SAID OFFER.

Firm Statement ASSOCIATED CASES: ENFORCEMENT NO. 2014-02; FINRA NO.20110302026/20130369180


Decision

Disclosure 18 of 27

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Allegations: SECURITIES EXCHANGE ACT OF 1934 RULES 15C3-5(B) AND (C); NYSEARCA OPTIONS RULES 11.18(B) AND (C): A HEARING OFFICER AT FINRACONSIDERED AN OFFER OF SETTLEMENT AND CONSENT ENTERED INTOBETWEEN FINRA'S DEPARTMENT OF MARKET REGULATION ON BEHALF OFNYSE REGULATION, INC. AND CUTLER GROUP, LP, AN NYSE ARCA OPTIONSTRADING PERMIT HOLDER. THE OFFER OF SETTLEMENT AND CONSENTWAS SUBMITTED FOR THE SOLE PURPOSE OF SETTLING THEDISCIPLINARY PROCEEDING, WITHOUT ADJUDICATION OF ANY ISSUES OFLAW OR FACT, AND WITHOUT ADMITTING OR DENYING ANY ALLEGATIONSOR FINDINGS REFERRED TO THEREIN. THE HEARING OFFICER ACCEPTSTHE OFFER OF SETTLEMENT AND CONSENT AND ISSUES THIS DECISIONIN ACCORDANCE WITH NYSE ARCA OPTIONS RULES. THE FIRM FAILED TOHAVE ADEQUATE RISK MANAGEMENT CONTROLS TO IDENTIFY POTENTIALWASH TRADES IN THAT IT LACKED: SYSTEM PARAMETERS TO PREVENTPOTENTIAL WASH TRADES; A SURVEILLANCE TO DETECT POTENTIALWASH TRADES; AND WRITTEN SUPERVISORY PROCEDURES THATPROVIDED FOR REVIEWS WITH RESPECT TO WASH TRADES. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO ADDRESS ITSOVERALL OPEN EXPOSURE WITH RESPECT TO OPTIONS MARKET MAKINGQUOTES AND MONITORING OF TRADERS' CREDIT AND CAPITALTHRESHOLDS IN THAT THE FIRM'S MARKET MAKER QUOTES PROCESSEDTHROUGH ONE OF ITS PROPRIETARY SYSTEMS, HAD NOT BEENINCLUDED WHEN THE FIRM MONITORED ITS TRADERS' CAPITALTHRESHOLDS. ADDITIONALLY, THE FIRM ALLOWED ITS TRADERS TOOVERRIDE THE FIRM'S DEFAULT RISK PARAMETERS IN ITS QUOTINGSYSTEMS AND FAILED TO ENSURE THAT MANAGEMENT RECEIVED TIMELYNOTIFICATIONS OR GRANTED TIMELY APPROVALS WITH RESPECT TOTRADERS' CHANGING THOSE PARAMETERS. ALTHOUGH THE FIRM'SPARAMETERS INCLUDED A MAXIMUM ORDER QUANTITY OF 200CONTRACTS FOR ALL OPTIONS TRADES AND 10,000 SHARES FOR ALLSTOCK TRADES, INDIVIDUAL TRADERS COULD SET THEIR OWNPARAMETERS BY INDIVIDUAL OPTION AND OVERRIDE THE FIRM'SPARAMETERS, AND THE FIRM'S SUPERVISORY PERSONNEL WOULD NOTRECEIVE ANY NOTICE UNTIL THE FOLLOWING TRADING DAY. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO HAVESYSTEMS IN PLACE TO PREVENT ITS ALGORITHMS FROM TRANSMITTINGEXCESSIVE QUOTES AND EXCESSIVE MESSAGE TRAFFIC (E.G., QUOTESAND ORDERS) TO THE NYSE ARCA OPTIONS MARKET. AS A RESULT OFRECEIVING COMPLAINTS IN CONNECTION WITH WHAT APPEARED TO BESIGNIFICANT SPIKES IN MESSAGE TRAFFIC IN CERTAIN OPTIONS SERIESTRANSMITTED TO NYSE ARCA IN AUGUST 2011 AND JANUARY 2012, FINRACONDUCTED AN INVESTIGATION TO DETERMINE THE CAUSE AND FOUNDTHAT THE FIRM, ON AT LEAST SEVEN OCCASIONS, HAD TRANSMITTED ASMANY AS 234 QUOTES IN THE SAME OPTIONS SERIES IN A SINGLESECOND AS A RESULT OF PROPRIETARY SYSTEM DEFICIENCIES THAT HADNOT BEEN TIMELY DETECTED BY THE FIRM.













SECURITIES EXCHANGE ACT OF 1934 RULES 15C3-5(B) AND (C); NYSEARCA OPTIONS RULES 11.18(B) AND (C): A HEARING OFFICER AT FINRACONSIDERED AN OFFER OF SETTLEMENT AND CONSENT ENTERED INTOBETWEEN FINRA'S DEPARTMENT OF MARKET REGULATION ON BEHALF OFNYSE REGULATION, INC. AND CUTLER GROUP, LP, AN NYSE ARCA OPTIONSTRADING PERMIT HOLDER. THE OFFER OF SETTLEMENT AND CONSENTWAS SUBMITTED FOR THE SOLE PURPOSE OF SETTLING THEDISCIPLINARY PROCEEDING, WITHOUT ADJUDICATION OF ANY ISSUES OFLAW OR FACT, AND WITHOUT ADMITTING OR DENYING ANY ALLEGATIONSOR FINDINGS REFERRED TO THEREIN. THE HEARING OFFICER ACCEPTSTHE OFFER OF SETTLEMENT AND CONSENT AND ISSUES THIS DECISIONIN ACCORDANCE WITH NYSE ARCA OPTIONS RULES. THE FIRM FAILED TOHAVE ADEQUATE RISK MANAGEMENT CONTROLS TO IDENTIFY POTENTIALWASH TRADES IN THAT IT LACKED: SYSTEM PARAMETERS TO PREVENTPOTENTIAL WASH TRADES; A SURVEILLANCE TO DETECT POTENTIALWASH TRADES; AND WRITTEN SUPERVISORY PROCEDURES THATPROVIDED FOR REVIEWS WITH RESPECT TO WASH TRADES. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO ADDRESS ITSOVERALL OPEN EXPOSURE WITH RESPECT TO OPTIONS MARKET MAKINGQUOTES AND MONITORING OF TRADERS' CREDIT AND CAPITALTHRESHOLDS IN THAT THE FIRM'S MARKET MAKER QUOTES PROCESSEDTHROUGH ONE OF ITS PROPRIETARY SYSTEMS, HAD NOT BEENINCLUDED WHEN THE FIRM MONITORED ITS TRADERS' CAPITALTHRESHOLDS. ADDITIONALLY, THE FIRM ALLOWED ITS TRADERS TOOVERRIDE THE FIRM'S DEFAULT RISK PARAMETERS IN ITS QUOTINGSYSTEMS AND FAILED TO ENSURE THAT MANAGEMENT RECEIVED TIMELYNOTIFICATIONS OR GRANTED TIMELY APPROVALS WITH RESPECT TOTRADERS' CHANGING THOSE PARAMETERS. ALTHOUGH THE FIRM'SPARAMETERS INCLUDED A MAXIMUM ORDER QUANTITY OF 200CONTRACTS FOR ALL OPTIONS TRADES AND 10,000 SHARES FOR ALLSTOCK TRADES, INDIVIDUAL TRADERS COULD SET THEIR OWNPARAMETERS BY INDIVIDUAL OPTION AND OVERRIDE THE FIRM'SPARAMETERS, AND THE FIRM'S SUPERVISORY PERSONNEL WOULD NOTRECEIVE ANY NOTICE UNTIL THE FOLLOWING TRADING DAY. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO HAVESYSTEMS IN PLACE TO PREVENT ITS ALGORITHMS FROM TRANSMITTINGEXCESSIVE QUOTES AND EXCESSIVE MESSAGE TRAFFIC (E.G., QUOTESAND ORDERS) TO THE NYSE ARCA OPTIONS MARKET. AS A RESULT OFRECEIVING COMPLAINTS IN CONNECTION WITH WHAT APPEARED TO BESIGNIFICANT SPIKES IN MESSAGE TRAFFIC IN CERTAIN OPTIONS SERIESTRANSMITTED TO NYSE ARCA IN AUGUST 2011 AND JANUARY 2012, FINRACONDUCTED AN INVESTIGATION TO DETERMINE THE CAUSE AND FOUNDTHAT THE FIRM, ON AT LEAST SEVEN OCCASIONS, HAD TRANSMITTED ASMANY AS 234 QUOTES IN THE SAME OPTIONS SERIES IN A SINGLESECOND AS A RESULT OF PROPRIETARY SYSTEM DEFICIENCIES THAT HADNOT BEEN TIMELY DETECTED BY THE FIRM.









Resolution:




No


Decision


Allegations: SECURITIES EXCHANGE ACT OF 1934 RULES 15C3-5(B) AND (C); NYSEARCA OPTIONS RULES 11.18(B) AND (C): A HEARING OFFICER AT FINRACONSIDERED AN OFFER OF SETTLEMENT AND CONSENT ENTERED INTOBETWEEN FINRA'S DEPARTMENT OF MARKET REGULATION ON BEHALF OFNYSE REGULATION, INC. AND CUTLER GROUP, LP, AN NYSE ARCA OPTIONSTRADING PERMIT HOLDER. THE OFFER OF SETTLEMENT AND CONSENTWAS SUBMITTED FOR THE SOLE PURPOSE OF SETTLING THEDISCIPLINARY PROCEEDING, WITHOUT ADJUDICATION OF ANY ISSUES OFLAW OR FACT, AND WITHOUT ADMITTING OR DENYING ANY ALLEGATIONSOR FINDINGS REFERRED TO THEREIN. THE HEARING OFFICER ACCEPTSTHE OFFER OF SETTLEMENT AND CONSENT AND ISSUES THIS DECISIONIN ACCORDANCE WITH NYSE ARCA OPTIONS RULES. THE FIRM FAILED TOHAVE ADEQUATE RISK MANAGEMENT CONTROLS TO IDENTIFY POTENTIALWASH TRADES IN THAT IT LACKED: SYSTEM PARAMETERS TO PREVENTPOTENTIAL WASH TRADES; A SURVEILLANCE TO DETECT POTENTIALWASH TRADES; AND WRITTEN SUPERVISORY PROCEDURES THATPROVIDED FOR REVIEWS WITH RESPECT TO WASH TRADES. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO ADDRESS ITSOVERALL OPEN EXPOSURE WITH RESPECT TO OPTIONS MARKET MAKINGQUOTES AND MONITORING OF TRADERS' CREDIT AND CAPITALTHRESHOLDS IN THAT THE FIRM'S MARKET MAKER QUOTES PROCESSEDTHROUGH ONE OF ITS PROPRIETARY SYSTEMS, HAD NOT BEENINCLUDED WHEN THE FIRM MONITORED ITS TRADERS' CAPITALTHRESHOLDS. ADDITIONALLY, THE FIRM ALLOWED ITS TRADERS TOOVERRIDE THE FIRM'S DEFAULT RISK PARAMETERS IN ITS QUOTINGSYSTEMS AND FAILED TO ENSURE THAT MANAGEMENT RECEIVED TIMELYNOTIFICATIONS OR GRANTED TIMELY APPROVALS WITH RESPECT TOTRADERS' CHANGING THOSE PARAMETERS. ALTHOUGH THE FIRM'SPARAMETERS INCLUDED A MAXIMUM ORDER QUANTITY OF 200CONTRACTS FOR ALL OPTIONS TRADES AND 10,000 SHARES FOR ALLSTOCK TRADES, INDIVIDUAL TRADERS COULD SET THEIR OWNPARAMETERS BY INDIVIDUAL OPTION AND OVERRIDE THE FIRM'SPARAMETERS, AND THE FIRM'S SUPERVISORY PERSONNEL WOULD NOTRECEIVE ANY NOTICE UNTIL THE FOLLOWING TRADING DAY. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO HAVESYSTEMS IN PLACE TO PREVENT ITS ALGORITHMS FROM TRANSMITTINGEXCESSIVE QUOTES AND EXCESSIVE MESSAGE TRAFFIC (E.G., QUOTESAND ORDERS) TO THE NYSE ARCA OPTIONS MARKET. AS A RESULT OFRECEIVING COMPLAINTS IN CONNECTION WITH WHAT APPEARED TO BESIGNIFICANT SPIKES IN MESSAGE TRAFFIC IN CERTAIN OPTIONS SERIESTRANSMITTED TO NYSE ARCA IN AUGUST 2011 AND JANUARY 2012, FINRACONDUCTED AN INVESTIGATION TO DETERMINE THE CAUSE AND FOUNDTHAT THE FIRM, ON AT LEAST SEVEN OCCASIONS, HAD TRANSMITTED ASMANY AS 234 QUOTES IN THE SAME OPTIONS SERIES IN A SINGLESECOND AS A RESULT OF PROPRIETARY SYSTEM DEFICIENCIES THAT HADNOT BEEN TIMELY DETECTED BY THE FIRM.














SECURITIES EXCHANGE ACT OF 1934 RULES 15C3-5(B) AND (C); NYSEARCA OPTIONS RULES 11.18(B) AND (C): A HEARING OFFICER AT FINRACONSIDERED AN OFFER OF SETTLEMENT AND CONSENT ENTERED INTOBETWEEN FINRA'S DEPARTMENT OF MARKET REGULATION ON BEHALF OFNYSE REGULATION, INC. AND CUTLER GROUP, LP, AN NYSE ARCA OPTIONSTRADING PERMIT HOLDER. THE OFFER OF SETTLEMENT AND CONSENTWAS SUBMITTED FOR THE SOLE PURPOSE OF SETTLING THEDISCIPLINARY PROCEEDING, WITHOUT ADJUDICATION OF ANY ISSUES OFLAW OR FACT, AND WITHOUT ADMITTING OR DENYING ANY ALLEGATIONSOR FINDINGS REFERRED TO THEREIN. THE HEARING OFFICER ACCEPTSTHE OFFER OF SETTLEMENT AND CONSENT AND ISSUES THIS DECISIONIN ACCORDANCE WITH NYSE ARCA OPTIONS RULES. THE FIRM FAILED TOHAVE ADEQUATE RISK MANAGEMENT CONTROLS TO IDENTIFY POTENTIALWASH TRADES IN THAT IT LACKED: SYSTEM PARAMETERS TO PREVENTPOTENTIAL WASH TRADES; A SURVEILLANCE TO DETECT POTENTIALWASH TRADES; AND WRITTEN SUPERVISORY PROCEDURES THATPROVIDED FOR REVIEWS WITH RESPECT TO WASH TRADES. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO ADDRESS ITSOVERALL OPEN EXPOSURE WITH RESPECT TO OPTIONS MARKET MAKINGQUOTES AND MONITORING OF TRADERS' CREDIT AND CAPITALTHRESHOLDS IN THAT THE FIRM'S MARKET MAKER QUOTES PROCESSEDTHROUGH ONE OF ITS PROPRIETARY SYSTEMS, HAD NOT BEENINCLUDED WHEN THE FIRM MONITORED ITS TRADERS' CAPITALTHRESHOLDS. ADDITIONALLY, THE FIRM ALLOWED ITS TRADERS TOOVERRIDE THE FIRM'S DEFAULT RISK PARAMETERS IN ITS QUOTINGSYSTEMS AND FAILED TO ENSURE THAT MANAGEMENT RECEIVED TIMELYNOTIFICATIONS OR GRANTED TIMELY APPROVALS WITH RESPECT TOTRADERS' CHANGING THOSE PARAMETERS. ALTHOUGH THE FIRM'SPARAMETERS INCLUDED A MAXIMUM ORDER QUANTITY OF 200CONTRACTS FOR ALL OPTIONS TRADES AND 10,000 SHARES FOR ALLSTOCK TRADES, INDIVIDUAL TRADERS COULD SET THEIR OWNPARAMETERS BY INDIVIDUAL OPTION AND OVERRIDE THE FIRM'SPARAMETERS, AND THE FIRM'S SUPERVISORY PERSONNEL WOULD NOTRECEIVE ANY NOTICE UNTIL THE FOLLOWING TRADING DAY. THE FIRMFAILED TO HAVE ADEQUATE WRITTEN SUPERVISORY PROCEDURES ANDOPERATIONAL RISK CONTROL SYSTEMS THAT WERE REASONABLYDESIGNED WITH RESPECT TO THE OVERSIGHT AND OPERATION OFALGORITHMIC QUOTING AND TRADING. THE FIRM FAILED TO HAVESYSTEMS IN PLACE TO PREVENT ITS ALGORITHMS FROM TRANSMITTINGEXCESSIVE QUOTES AND EXCESSIVE MESSAGE TRAFFIC (E.G., QUOTESAND ORDERS) TO THE NYSE ARCA OPTIONS MARKET. AS A RESULT OFRECEIVING COMPLAINTS IN CONNECTION WITH WHAT APPEARED TO BESIGNIFICANT SPIKES IN MESSAGE TRAFFIC IN CERTAIN OPTIONS SERIESTRANSMITTED TO NYSE ARCA IN AUGUST 2011 AND JANUARY 2012, FINRACONDUCTED AN INVESTIGATION TO DETERMINE THE CAUSE AND FOUNDTHAT THE FIRM, ON AT LEAST SEVEN OCCASIONS, HAD TRANSMITTED ASMANY AS 234 QUOTES IN THE SAME OPTIONS SERIES IN A SINGLESECOND AS A RESULT OF PROPRIETARY SYSTEM DEFICIENCIES THAT HADNOT BEEN TIMELY DETECTED BY THE FIRM.

Resolution: Decision 55©2022 FINRA. All rights reserved. Report about CUTLER GROUP, LP






Resolution:


Sanction Details: SEE ABOVE.


Decision

Disclosure 19 of 27

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Initiated By: NASDAQ OMX PHLX


Censure


FINE $15,000





Allegations: *5/3/13* ALLEGED VIOLATIONS: DURING THE PERIOD JULY 1, 2012THROUGH SEPTEMBER 30, 2102, CUTLER VIOLATED EXCHANGE RULE1014(B)(II)(D)(1), OBLIGATIONS AND RESTRICTIONS APPLICABLE TOSPECIALISTS AND REGISTERED OPTIONS TRADERS. THE FIRM, ACTINGAS A REMOTE STREAMING QUOTE TRADER FAILED TO QUOTECONTINUOUSLY, TWO-SIDED MARKETS IN MULTIPLE OPTIONS, THEREBYRESULTING IN 1,149 FAILURES TO QUOTE IN AT LEAST 60% OF THE SERIESIN THOSE OPTIONS DURING THE PERIOD.



Resolution:


Sanction Details: $15,000 TOTAL FINE TO BE PAID BY APPLICANT.

Firm Statement *5/3/13* CUTLER HAS BEEN CHARGED IN A LETTER FROM NASDAQ OMXPHLX OF ALLEGEDLY VIOLATING EXCHANGE RULE 1014(B)(II)(D)(1).CUTLER RECEIVED AN OFFER OF SETTLEMENT FOR PROPOSEDSANCTIONS: (A) CENSURE AND (B) FINE OF $15,000. *5/7/13* CUTLER HASRESPONDED TO ACCEPT THE OFFER OF SETTLEMENT. *6/7/13* FINALDISCIPLINARY ACTIONNOTICE SENT TO CUTLER CONFIRMING THE ABOVE SANCTIONS.








Firm Statement *5/3/13* CUTLER HAS BEEN CHARGED IN A LETTER FROM NASDAQ OMXPHLX OF ALLEGEDLY VIOLATING EXCHANGE RULE 1014(B)(II)(D)(1).CUTLER RECEIVED AN OFFER OF SETTLEMENT FOR PROPOSEDSANCTIONS: (A) CENSURE AND (B) FINE OF $15,000. *5/7/13* CUTLER HASRESPONDED TO ACCEPT THE OFFER OF SETTLEMENT. *6/7/13* FINALDISCIPLINARY ACTIONNOTICE SENT TO CUTLER CONFIRMING THE ABOVE SANCTIONS.

Disclosure 20 of 27

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Docket/Case Number: 12-0138 AND 13-0018



Allegations: CUTLER GROUP, L.P. ("CUTLER"), AN EXCHANGE TPH ORGANIZATION, WASCENSURED AND FINED $20,000 FOR THE FOLLOWING CONDUCT. ONMULTIPLE DATES, CUTLER ROUTED QUOTES TO THE EXCHANGE INVARIOUS NON-APPOINTED CLASSES. CUTLER ALSO FAILED TO ENACTSUFFICIENT CONTROLS AND PROCEDURES TO PREVENT THE ENTRY OFQUOTES THAT DID NOT FULFILL THE EXCHANGE'S REGULATORYREQUIREMENTS THAT MUST BE SATISFIED ON A PRE-ORDER ENTRYBASIS. IN ADDITION, CUTLER FAILED TO ESTABLISH AND IMPLEMENTADEQUATE SUPERVISORY PROCEDURES AND FAILED TO SUPERVISE ITSEMPLOYEES TO ASSURE COMPLIANCE WITH EXCHANGE RULE 8.3(C) ANDRULE 15C3-5(C)(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED. (EXCHANGE RULES 4.2 - ADHERENCE TO LAW AND 8.3 -APPOINTMENT OF MARKET-MAKERS; AND RULE 15C3-5 - RISKMANAGEMENT CONTROLS FOR BROKERS OR DEALERS WITH MARKETACCESS PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF1934, AS AMENDED)



Resolution: Decision & Order of Offer of Settlement








Sanction Details: A $20,000.00 FINE AND A CENSURE.







CENSURE





Allegations: *04/11/13* ALLEGED VIOLATIONS: (1) VIOLATION OF EXCHANGE RULES 8.3(C) APPOINTMENT OF MARKET-MAKERS AND 8.3A(A) MAXIMUM NUMBEROF MARKET PARTICIPANTS QUOTING ELECTRONICALLY - ON VARIOUSDAYS IN MAY, JULY, AUGUST AND DECEMBER 2012 AND FEBRUARY ANDMARCH 2013, CUTLER ALLEGEDLY ROUTED QUOTES IN VARIOUS NON-APPOINTED CLASSES; (2) VIOLATION OF SEC RULE 15C3-5(C)(2) RISKMANAGEMENT CONTROLS FOR BROKERS OR DEALERS WITH MARKETACCESS - CUTLER ALLEGEDLY FAILED TO ENACT SUFFICIENT CONTROLSAND PROCEDURES TO PREVENT THE ENTRY OF QUOTES THAT LED TOVIOLATION (1); AND (3) VIOLATION OF EXCHANGE RULE 4.2 ADHERENCETO LAW - CUTLER ALLEGEDLY FAILED TO ESTABLISH AND IMPLEMENTADEQUATE SUPERVISORY PROCEDURES AND FAILED TO SUPERVISE ITSEMPLOYEES TO ASSURE COMPLIANCE WITH THEABOVE RULES/REGULATIONS.



Resolution:









Sanction Details: $20,000 TOTAL FINE PAID BY APPLICANT ON 5/7/2013.

Firm Statement *04/11/13* CUTLER HAS BEEN CHARGED IN A WELLS LETTER OFALLEGEDLY SUBMITTING QUOTES IN NON-APPOINTED CLASSES ONVARIOUS DAYS IN MAY, JULY, AUGUST AND DECEMBER 2012 ANDFEBRUARY AND MARCH 2013 *04/12/13* CUTLER HAS RESPONDED WITHAN OFFER OF SETTLEMENT AND LETTER OF CONSENT FOR PROPOSEDSANCTION OF $20,000 FINE AND CENSURE

Disclosure 21 of 27

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Allegations: SEC RULES 204(A), 204(B), 204(D) OF REGULATION SHO, NASDAQ OMXPHLX, LLC RULE 748(G) - CUTLER GROUP, LP FAILED TO CLOSE OUTALLOCATED FAIL-TO-DELIVER POSITIONS IN THE SECURITIES OF ANISSUER WITHIN THE REQUIRED TIMEFRAME. WHILE MAINTAINING FAIL-TO-DELIVER POSITIONS, THE FIRM HAD EFFECTED NUMEROUS SHORT SALETRANSACTIONS WITHOUT FIRST PRE-BORROWING THE SECURITIES.AFTER IT RECEIVED, BUT HAD FAILED TO CLOSE OUT, ALLOCATED FAIL-TO-DELIVER POSITIONS IN THE SECURITIES FROM ITS CLEARING FIRM,THE FIRM HAD FAILED TO NOTIFY ITS CLEARING FIRM THAT IT HAD NOTCLOSED OUT ITS ALLOCATED FILE-TO-DELIVER POSITIONS IN THESECURITIES AND HAD THEREBY BECOME SUBJECT TO THE PRE-BORROWREQUIREMENT OF RULE 204(B) FOR THE POSITIONS THAT WERE NOTCLOSED OUT WITHIN THE REQUIRED TIMEFRAME. THE FIRM FAILED TOENFORCE AND FOLLOW THE WRITTEN SUPERVISORY PROCEDURES ITHAD IMPLEMENTED TO SUPERVISE FOR, AND PREVENT VIOLATIONS OF,THE DELIVERY, PRE-BORROW AND NOTIFICATION PROVISIONS OF RULE204 OF REGULATION SHO PROMULGATED UNDER THE SECURITIESEXCHANGE ACT OF 1934.


Resolution: Decision & Order of Offer of Settlement 59©2022 FINRA. All rights reserved. Report about CUTLER GROUP, LP






Resolution:


Sanction Details: THE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS WHICH THE BUSINESS CONDUCT COMMITTEEACCEPTED. THE FIRM IS CENSURED AND FINED $52,500. IF THE FIRMFAILS TO PAY THE FINE WITHIN 30 DAYS OF THE DATE OF THE DECISION,OR FAILS TO COMPLY WITH ANY OTHER SANCTIONS BY THE DATE SET,THE COMMITTEE SHALL DECLARE THE FIRM TO BE IN MATERIAL BREACHOF ITS AGREEMENT AND MAY TAKE WHATEVER ACTIONS IT DEEMSNECESSARY TO RESPOND TO THE BREACH, INCLUDING, BUT NOT LIMITEDTO, RESCINDING THIS DECISION AND ALLOWING THE MATTER TOPROCEED IN ACCORDANCE WITH NASDAQ OMX PHLX EXCHANGE RULES960.1 THROUGH 960.12.

Regulator Statement OTHER CASE NUMBER: PHLX ENFORCEMENT NO. 2012-16.


No




Allegations: *11/16/12* ALLEGED VIOLATIONS: (1) VIOLATION OF REGULATION SHORULES 204(A), 204(B) AND 204(D) - THAT CUTLER FAILED TO TIMELY CLOSEOUT ITS ALLOCATED FAILED POSITIONS ON 12 OCCASIONS ANDSUBEQUENTLY EFFECTED NUMEROUS SHORT SALE POSITIONS ANDADDITIONALLY FAILED TO NOTIFY ITS CLEARING FIRM (MERRILL LYNCHPROFESSIONAL CLEARING CORP) THAT PRIOR TO EFFECTING ANYSUBSEQUENT SHORT SALES, IT WAS REQUIRED TO BORROW OR ENTERINTO A BONA FIDE ARRANGEMENT TO BORROW SECURITIES, UNTIL THEFIRM HAD COMPLETELY CLOSED OUT ITS ALLOCATED FAIL POSITIONS; (2)VIOLATION OF EXCHANGE RULE 748 - CUTLER FAILED TO ADEQUATELYSUPERVISE FOR, AND PREVENT VIOLATIONS OF, REGULATION SHO:CUTLER ALLEGEDLY HAD (A) NOT EFFECTIVELY TRACKED ANDMONITORED BUY-INS (B) BEEN UNAWARE THAT ITS MM HAD NOT METTHEIR CLOSE-OUT OBLIGATIONS (C) CONTINUED TO EFFECT SHORTSALES WITHOUT PRE-BORROWING SECURITIES (D) FAILED TO NORIFY ITSCLEARING FIRM.







Initiated By: FINRA


Censure


MONETARY/FINE: $52,500





*11/16/12* ALLEGED VIOLATIONS: (1) VIOLATION OF REGULATION SHORULES 204(A), 204(B) AND 204(D) - THAT CUTLER FAILED TO TIMELY CLOSEOUT ITS ALLOCATED FAILED POSITIONS ON 12 OCCASIONS ANDSUBEQUENTLY EFFECTED NUMEROUS SHORT SALE POSITIONS ANDADDITIONALLY FAILED TO NOTIFY ITS CLEARING FIRM (MERRILL LYNCHPROFESSIONAL CLEARING CORP) THAT PRIOR TO EFFECTING ANYSUBSEQUENT SHORT SALES, IT WAS REQUIRED TO BORROW OR ENTERINTO A BONA FIDE ARRANGEMENT TO BORROW SECURITIES, UNTIL THEFIRM HAD COMPLETELY CLOSED OUT ITS ALLOCATED FAIL POSITIONS; (2)VIOLATION OF EXCHANGE RULE 748 - CUTLER FAILED TO ADEQUATELYSUPERVISE FOR, AND PREVENT VIOLATIONS OF, REGULATION SHO:CUTLER ALLEGEDLY HAD (A) NOT EFFECTIVELY TRACKED ANDMONITORED BUY-INS (B) BEEN UNAWARE THAT ITS MM HAD NOT METTHEIR CLOSE-OUT OBLIGATIONS (C) CONTINUED TO EFFECT SHORTSALES WITHOUT PRE-BORROWING SECURITIES (D) FAILED TO NORIFY ITSCLEARING FIRM.


Resolution:


Sanction Details: MONETARY/FINE OF $52,500 ASSUMED IN ITS ENTIRETY BY THEAPPLICANT; PAID 1/2/2013

Firm Statement *11/16/12* CUTLER HAS BEEN CHARGED IN A WELLS LETTER OFALLEGEDLY FAILING TO TIMELY CLOSE OUT ITS ALLOCATED POSITIONSON 12 OCCASIONS, AND FAILED TO NOTIFY ITS CLEARNING FIRM THAT ASA RESULT OF ITS CLOSE-OUT DEFICIENCY, IT HAD BECOME SUBJECT TOTHE PRE-BORROW REQUIREMENTS OF RULE 204(B) OF REGULATION SHO,DURING THE PERIOD JULY 2009 TO MARCH 2010.*11/26/12* OFFER OF SETTLEMENT SUBMITTED BY CUTLER (PENDINGBEFORE THE BCC).*01/02/13* DECISION ISSUED BY BCC UPON ACCEPTANCE OF OFFER OFSETTLEMENT.



Disclosure 22 of 27

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Allegations: SEC RULES 204(A), 204(B), 204(D) OF REGULATION SHO, NASDAQ OMXPHLX, LLC RULE 748(G) - CUTLER GROUP, LP FAILED TO CLOSE OUTALLOCATED FAIL-TO-DELIVER POSITIONS IN THE SECURITIES OF ANISSUER WITHIN THE REQUIRED TIMEFRAME. WHILE MAINTAINING FAIL-TO-DELIVER POSITIONS, THE FIRM HAD EFFECTED NUMEROUS SHORT SALETRANSACTIONS WITHOUT FIRST PRE-BORROWING THE SECURITIES.AFTER IT RECEIVED, BUT HAD FAILED TO CLOSE OUT, ALLOCATED FAIL-TO-DELIVER POSITIONS IN THE SECURITIES FROM ITS CLEARING FIRM,THE FIRM HAD FAILED TO NOTIFY ITS CLEARING FIRM THAT IT HAD NOTCLOSED OUT ITS ALLOCATED FILE-TO-DELIVER POSITIONS IN THESECURITIES AND HAD THEREBY BECOME SUBJECT TO THE PRE-BORROWREQUIREMENT OF RULE 204(B) FOR THE POSITIONS THAT WERE NOTCLOSED OUT WITHIN THE REQUIRED TIMEFRAME. THE FIRM FAILED TOENFORCE AND FOLLOW THE WRITTEN SUPERVISORY PROCEDURES ITHAD IMPLEMENTED TO SUPERVISE FOR, AND PREVENT VIOLATIONS OF,THE DELIVERY, PRE-BORROW AND NOTIFICATION PROVISIONS OF RULE204 OF REGULATION SHO PROMULGATED UNDER THE SECURITIESEXCHANGE ACT OF 1934.














SEC RULES 204(A), 204(B), 204(D) OF REGULATION SHO, NASDAQ OMXPHLX, LLC RULE 748(G) - CUTLER GROUP, LP FAILED TO CLOSE OUTALLOCATED FAIL-TO-DELIVER POSITIONS IN THE SECURITIES OF ANISSUER WITHIN THE REQUIRED TIMEFRAME. WHILE MAINTAINING FAIL-TO-DELIVER POSITIONS, THE FIRM HAD EFFECTED NUMEROUS SHORT SALETRANSACTIONS WITHOUT FIRST PRE-BORROWING THE SECURITIES.AFTER IT RECEIVED, BUT HAD FAILED TO CLOSE OUT, ALLOCATED FAIL-TO-DELIVER POSITIONS IN THE SECURITIES FROM ITS CLEARING FIRM,THE FIRM HAD FAILED TO NOTIFY ITS CLEARING FIRM THAT IT HAD NOTCLOSED OUT ITS ALLOCATED FILE-TO-DELIVER POSITIONS IN THESECURITIES AND HAD THEREBY BECOME SUBJECT TO THE PRE-BORROWREQUIREMENT OF RULE 204(B) FOR THE POSITIONS THAT WERE NOTCLOSED OUT WITHIN THE REQUIRED TIMEFRAME. THE FIRM FAILED TOENFORCE AND FOLLOW THE WRITTEN SUPERVISORY PROCEDURES ITHAD IMPLEMENTED TO SUPERVISE FOR, AND PREVENT VIOLATIONS OF,THE DELIVERY, PRE-BORROW AND NOTIFICATION PROVISIONS OF RULE204 OF REGULATION SHO PROMULGATED UNDER THE SECURITIESEXCHANGE ACT OF 1934.


Resolution:


Sanction Details: THE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS WHICH THE BUSINESS CONDUCT COMMITTEEACCEPTED. THE FIRM IS CENSURED AND FINED $52,500. IF THE FIRMFAILS TO PAY THE FINE WITHIN 30 DAYS OF THE DATE OF THE DECISION,OR FAILS TO COMPLY WITH ANY OTHER SANCTIONS BY THE DATE SET,THE COMMITTEE SHALL DECLARE THE FIRM TO BE IN MATERIAL BREACHOF ITS AGREEMENT AND MAY TAKE WHATEVER ACTIONS IT DEEMSNECESSARY TO RESPOND TO THE BREACH, INCLUDING, BUT NOT LIMITEDTO, RESCINDING THIS DECISION AND ALLOWING THE MATTER TOPROCEED IN ACCORDANCE WITH NASDAQ OMX PHLX EXCHANGE RULES960.1 THROUGH 960.12.


No







www.finra.org/brokercheck User GuidanceTHE FIRM MADE AN OFFER OF SETTLEMENT, STIPULATION OF FACTS ANDCONSENT TO SANCTIONS WHICH THE BUSINESS CONDUCT COMMITTEEACCEPTED. THE FIRM IS CENSURED AND FINED $52,500. IF THE FIRMFAILS TO PAY THE FINE WITHIN 30 DAYS OF THE DATE OF THE DECISION,OR FAILS TO COMPLY WITH ANY OTHER SANCTIONS BY THE DATE SET,THE COMMITTEE SHALL DECLARE THE FIRM TO BE IN MATERIAL BREACHOF ITS AGREEMENT AND MAY TAKE WHATEVER ACTIONS IT DEEMSNECESSARY TO RESPOND TO THE BREACH, INCLUDING, BUT NOT LIMITEDTO, RESCINDING THIS DECISION AND ALLOWING THE MATTER TOPROCEED IN ACCORDANCE WITH NASDAQ OMX PHLX EXCHANGE RULES960.1 THROUGH 960.12.

Regulator Statement OTHER CASE NUMBER: PHLX ENFORCEMENT NO. 2012-16.

Disclosure 23 of 27

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Initiated By: NASDAQ OMX PHLX


Censure


FINE OF $25,000 AND FINE OF $75,000





Allegations: VIOLATION OF NASDAQ OMX RULE 1014(B)(II)(D)(1) - CONTINUOUSQUOTING OVER 60%VIOLATIONS OF NASDAQ OMX RULES 707, CONDUCT INCONSISTENT WITHJUST AND EQUITABLE PRINCIPLES OF TRADE AND 748 SUPERVISION AND782 MANIPULATIVE OPERATIONS



Resolution:


Sanction Details: FIRM WAS CENSURED AND FINED $25,000 FOR VIOLATION OF RULE 1014(B) (II) (D) (1) AND $75,000 FOR VIOLATION OF RULES 707,748 AND 782.

Firm Statement WITHOUT ADMITTING OR DENYING CUTLER SETTLED AS TO ALLEDGEDVIOLATIONS OF 1014 (B) (II)(D)(1), AS THERE WERE INSTANCES OF NOTQUOTING 60% OF THE OPTIONS SERIES IN ITS ALLOCATION. ALSOCULTER SETTLED CHARGES FOR ACTIONS FROM 2006. THE ALLGEDVIOLATIONS WERE FOR RULES 707,748 AND 782 IN 2006 IT WAS ALLEGEDCUTLER ENGAGED IN THE PRACTICE OF ENTERING NUMEROUSTRANSACTIONS AT THE THE CLOSED OF THE TRADING DAY IN NUMEROUSOPTIONS SERIES.

Sanctions Ordered: Monetary/Fine $100,000.00

Settled






WITHOUT ADMITTING OR DENYING CUTLER SETTLED AS TO ALLEDGEDVIOLATIONS OF 1014 (B) (II)(D)(1), AS THERE WERE INSTANCES OF NOTQUOTING 60% OF THE OPTIONS SERIES IN ITS ALLOCATION. ALSOCULTER SETTLED CHARGES FOR ACTIONS FROM 2006. THE ALLGEDVIOLATIONS WERE FOR RULES 707,748 AND 782 IN 2006 IT WAS ALLEGEDCUTLER ENGAGED IN THE PRACTICE OF ENTERING NUMEROUSTRANSACTIONS AT THE THE CLOSED OF THE TRADING DAY IN NUMEROUSOPTIONS SERIES.

Disclosure 24 of 27

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Allegations: **12/02/2009**OFFER OF SETTLEMENT AND CONSENT FILED BY NYSEREGULATION'S DIVISION OF ENFORCEMENT AND PENDING.CONSENTED TO FINDINGS: FOR THE SOLE PURPOSE OF SETTLING THISDISCIPLINARY PROCEEDING, WITHOUT ADJUDICATION OF ANY ISSUES OFLAW OR FACT, AND WITHOUT ADMITTING OR DENYING ANY ALLEGATIONSOR FINDINGS, CUTLER GROUP L.P. STIPULATED THAT THE FIRM:1.VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULES 17A-4(B)(4) AND 17A-4(F) THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL AND INSTANTMESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT, AND BYFAILING TO PRESERVE BUSINESS-RELATED FAX COMMUNICATIONS. 2.VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILINGTO MAINTAIN A COMPLETE AND ACCURATE LIST OF ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST, ANDBY FAILING TO OBTAIN, MAINTAIN AND REVIEW MONTHLY ACCOUNTSTATEMENTS FOR ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECTOR INDIRECT FINANCIAL INTEREST. 3.VIOLATED NYSE ARCA OPTIONSRULE 11.3(A) BY FAILING TO ESTABLISH, MAINTAIN, OR ENFORCEADEQUATE WRITTEN POLICIES AND PROCEDURES REASONABLYDESIGNED TO PREVENT THE MISUSE OF MATERIAL, NON-PUBLICINFORMATION BY ITS EMPLOYEES. 4.VIOLATED SECTION 17(A)(1) OF THEEXCHANGE ACT, AND RULE 17A-3(12) THEREUNDER, AND NYSE ARCAOPTIONS RULE 11.16(A), BY FAILING TO APPROPRIATELY CONDUCT ANDDOCUMENT BACKGROUND CHECKS OF ITS EMPLOYEES PRIOR TOEMPLOYMENT, AND BY FAILING TO PROPERLY RETAIN AND PRESERVEMANUALLY SIGNED FORMS U-4. 5. VIOLATED NYSE ARCA OPTIONS RULE11.18 BY FAILING TO ESTABLISH, MAINTAIN, AND/OR ENFORCEAPPROPRIATE WRITTEN POLICIES AND PROCEDURES FOR SUPERVISIONAND CONTROL, INCLUDING A SEPARATE SYSTEM OF FOLLOW-UP ANDREVIEW, IN THE FOLLOWING AREAS: A. CONDUCTING AND DOCUMENTINGBACKGROUND CHECKS OF ITS EMPLOYEES PRIOR TO EMPLOYMENT,INCLUDING MAINTAINING COMPLETE AND ACCURATE SIGNED FORMS U-4;B.RETENTION IN PROPER FORMAT AND REVIEW OF BUSINESS-RELATED E-MAILS, INSTANT MESSAGES AND FAXES SENT OR RECEIVED BY ITSEMPLOYEES; AND C. THE PREVENTION OF THE MISUSE OF MATERIAL,NON-PUBLIC INFORMATION BY ITS EMPLOYEES.STIPULATED SANCTION: CENSURE AND A FINE IN THE AMOUNT OF $20,000.











Docket/Case Number: 09-ARCA-12



**12/02/2009**OFFER OF SETTLEMENT AND CONSENT FILED BY NYSEREGULATION'S DIVISION OF ENFORCEMENT AND PENDING.CONSENTED TO FINDINGS: FOR THE SOLE PURPOSE OF SETTLING THISDISCIPLINARY PROCEEDING, WITHOUT ADJUDICATION OF ANY ISSUES OFLAW OR FACT, AND WITHOUT ADMITTING OR DENYING ANY ALLEGATIONSOR FINDINGS, CUTLER GROUP L.P. STIPULATED THAT THE FIRM:1.VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULES 17A-4(B)(4) AND 17A-4(F) THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL AND INSTANTMESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT, AND BYFAILING TO PRESERVE BUSINESS-RELATED FAX COMMUNICATIONS. 2.VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILINGTO MAINTAIN A COMPLETE AND ACCURATE LIST OF ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST, ANDBY FAILING TO OBTAIN, MAINTAIN AND REVIEW MONTHLY ACCOUNTSTATEMENTS FOR ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECTOR INDIRECT FINANCIAL INTEREST. 3.VIOLATED NYSE ARCA OPTIONSRULE 11.3(A) BY FAILING TO ESTABLISH, MAINTAIN, OR ENFORCEADEQUATE WRITTEN POLICIES AND PROCEDURES REASONABLYDESIGNED TO PREVENT THE MISUSE OF MATERIAL, NON-PUBLICINFORMATION BY ITS EMPLOYEES. 4.VIOLATED SECTION 17(A)(1) OF THEEXCHANGE ACT, AND RULE 17A-3(12) THEREUNDER, AND NYSE ARCAOPTIONS RULE 11.16(A), BY FAILING TO APPROPRIATELY CONDUCT ANDDOCUMENT BACKGROUND CHECKS OF ITS EMPLOYEES PRIOR TOEMPLOYMENT, AND BY FAILING TO PROPERLY RETAIN AND PRESERVEMANUALLY SIGNED FORMS U-4. 5. VIOLATED NYSE ARCA OPTIONS RULE11.18 BY FAILING TO ESTABLISH, MAINTAIN, AND/OR ENFORCEAPPROPRIATE WRITTEN POLICIES AND PROCEDURES FOR SUPERVISIONAND CONTROL, INCLUDING A SEPARATE SYSTEM OF FOLLOW-UP ANDREVIEW, IN THE FOLLOWING AREAS: A. CONDUCTING AND DOCUMENTINGBACKGROUND CHECKS OF ITS EMPLOYEES PRIOR TO EMPLOYMENT,INCLUDING MAINTAINING COMPLETE AND ACCURATE SIGNED FORMS U-4;B.RETENTION IN PROPER FORMAT AND REVIEW OF BUSINESS-RELATED E-MAILS, INSTANT MESSAGES AND FAXES SENT OR RECEIVED BY ITSEMPLOYEES; AND C. THE PREVENTION OF THE MISUSE OF MATERIAL,NON-PUBLIC INFORMATION BY ITS EMPLOYEES.STIPULATED SANCTION: CENSURE AND A FINE IN THE AMOUNT OF $20,000.


Resolution:


Sanction Details: **12/09/2009**DECISION 09-ARCA-12 ISSUED BY NYSE HEARING BOARD.CONSENTED TO FINDINGS: DURING THE PERIOD OF 2006 THROUGH 2007,THE FIRM: (1) VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, ANDRULES 17A-4(B)(4) AND 17A-4(F)THEREUNDER, AND NYSE ARCA OPTIONSRULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL ANDINSTANT MESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT,AND BY FAILING TO PRESERVE BUSINESS-RELATED FAXCOMMUNICATIONS; (2) VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILING TO MAINTAIN A COMPLETE AND ACCURATELIST OF ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECT ORINDIRECT FINANCIAL INTEREST, AND BY FAILING TO OBTAIN, MAINTAINAND REVIEW MONTHLY ACCOUNT STATEMENTS FOR ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST; (3)VIOLATED NYSE ARCA OPTIONS RULE 11.3(A) BY FAILING TO ESTABLISH,MAINTAIN, OR ENFORCE ADEQUATE WRITTEN POLICIES ANDPROCEDURES REASONABLY DESIGNED TO PREVENT THE MISUSE OFMATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES; (4) VIOLATEDSECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULE 17A-3(12)THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TOAPPROPRIATELY CONDUCT AND DOCUMENT BACKGROUND CHECKS OFITS EMPLOYEES PRIOR TO EMPLOYMENT, AND BY FAILING TO PROPERLYRETAIN AND PRESERVE MANUALLY SIGNED FORMS U-4; AND (5) VIOLATEDNYSE ARCA OPTIONS RULE 11.18 BY FAILING TO ESTABLISH, MAINTAIN,AND/OR ENFORCE APPROPRIATE WRITTEN POLICIES AND PROCEDURESFOR SUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, IN THE FOLLOWING AREAS: (A)CONDUCTINGAND DOCUMENTING BACKGROUND CHECKS OF ITS EMPLOYEES PRIORTO EMPLOYMENT, INCLUDING MAINTAINING COMPLETE AND ACCURATESIGNED FORMS U-4; (B)RETENTION IN PROPER FORMAT AND REVIEW OFBUSINESS-RELATED E-MAILS,INSTANT MESSAGES AND FAXES SENT ORRECEIVED BY ITS EMPLOYEES; AND (C) THE PREVENTION OF THE MISUSEOF MATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES.STIPULATED SANCTION: CENSURE AND A FINE IN THE AMOUNT OF $20,000.


No


Decision






**12/09/2009**DECISION 09-ARCA-12 ISSUED BY NYSE HEARING BOARD.CONSENTED TO FINDINGS: DURING THE PERIOD OF 2006 THROUGH 2007,THE FIRM: (1) VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, ANDRULES 17A-4(B)(4) AND 17A-4(F)THEREUNDER, AND NYSE ARCA OPTIONSRULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL ANDINSTANT MESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT,AND BY FAILING TO PRESERVE BUSINESS-RELATED FAXCOMMUNICATIONS; (2) VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILING TO MAINTAIN A COMPLETE AND ACCURATELIST OF ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECT ORINDIRECT FINANCIAL INTEREST, AND BY FAILING TO OBTAIN, MAINTAINAND REVIEW MONTHLY ACCOUNT STATEMENTS FOR ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST; (3)VIOLATED NYSE ARCA OPTIONS RULE 11.3(A) BY FAILING TO ESTABLISH,MAINTAIN, OR ENFORCE ADEQUATE WRITTEN POLICIES ANDPROCEDURES REASONABLY DESIGNED TO PREVENT THE MISUSE OFMATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES; (4) VIOLATEDSECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULE 17A-3(12)THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TOAPPROPRIATELY CONDUCT AND DOCUMENT BACKGROUND CHECKS OFITS EMPLOYEES PRIOR TO EMPLOYMENT, AND BY FAILING TO PROPERLYRETAIN AND PRESERVE MANUALLY SIGNED FORMS U-4; AND (5) VIOLATEDNYSE ARCA OPTIONS RULE 11.18 BY FAILING TO ESTABLISH, MAINTAIN,AND/OR ENFORCE APPROPRIATE WRITTEN POLICIES AND PROCEDURESFOR SUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, IN THE FOLLOWING AREAS: (A)CONDUCTINGAND DOCUMENTING BACKGROUND CHECKS OF ITS EMPLOYEES PRIORTO EMPLOYMENT, INCLUDING MAINTAINING COMPLETE AND ACCURATESIGNED FORMS U-4; (B)RETENTION IN PROPER FORMAT AND REVIEW OFBUSINESS-RELATED E-MAILS,INSTANT MESSAGES AND FAXES SENT ORRECEIVED BY ITS EMPLOYEES; AND (C) THE PREVENTION OF THE MISUSEOF MATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES.STIPULATED SANCTION: CENSURE AND A FINE IN THE AMOUNT OF $20,000.


Allegations: ALLEGED 1.VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, ANDRULES 17A-4(B)(4) AND 17A-4(F) THEREUNDER, AND NYSE ARCA OPTIONSRULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL ANDINSTANT MESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT,AND BY FAILING TO PRESERVE BUSINESS-RELATED FAXCOMMUNICATIONS. 2. VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILING TO MAINTAIN A COMPLETE AND ACCURATELIST OF ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECT ORINDIRECT FINANCIAL INTEREST, AND BY FAILING TO OBTAIN, MAINTAINAND REVIEW MONTHLY ACCOUNT STATEMENTS FOR ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST.3.VIOLATED NYSE ARCA OPTIONS RULE 11.3(A) BY FAILING TO ESTABLISH,MAINTAIN, OR ENFORCE ADEQUATE WRITTEN POLICIES ANDPROCEDURES REASONABLY DESIGNED TO PREVENT THE MISUSE OFMATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES. 4.VIOLATEDSECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULE 17A-3(12)THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TOAPPROPRIATELY CONDUCT AND DOCUMENT BACKGROUND CHECKS OFITS EMPLOYEES PRIOR TO EMPLOYMENT, AND BY FAILING TO PROPERLYRETAIN AND PRESERVE MANUALLY SIGNED FORMS U-4. 5. VIOLATED NYSEARCA OPTIONS RULE 11.18 BY FAILING TO ESTABLISH, MAINTAIN, AND/ORENFORCE APPROPRIATE WRITTEN POLICIES AND PROCEDURES FORSUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, IN THE FOLLOWING AREAS: A. CONDUCTINGAND DOCUMENTING BACKGROUND CHECKS OF ITS EMPLOYEES PRIORTO EMPLOYMENT, INCLUDING MAINTAINING COMPLETE AND ACCURATESIGNED FORMS U-4; B.RETENTION IN PROPER FORMAT AND REVIEW OFBUSINESS-RELATED E-MAILS, INSTANT MESSAGES AND FAXES SENT ORRECEIVED BY ITS EMPLOYEES; AND C. THE PREVENTION OF THE MISUSEOF MATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES.







Initiated By: NYSE/ARCA




CENSURE


Docket/Case Number: 09-ARCA-12



ALLEGED 1.VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, ANDRULES 17A-4(B)(4) AND 17A-4(F) THEREUNDER, AND NYSE ARCA OPTIONSRULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL ANDINSTANT MESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT,AND BY FAILING TO PRESERVE BUSINESS-RELATED FAXCOMMUNICATIONS. 2. VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILING TO MAINTAIN A COMPLETE AND ACCURATELIST OF ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECT ORINDIRECT FINANCIAL INTEREST, AND BY FAILING TO OBTAIN, MAINTAINAND REVIEW MONTHLY ACCOUNT STATEMENTS FOR ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST.3.VIOLATED NYSE ARCA OPTIONS RULE 11.3(A) BY FAILING TO ESTABLISH,MAINTAIN, OR ENFORCE ADEQUATE WRITTEN POLICIES ANDPROCEDURES REASONABLY DESIGNED TO PREVENT THE MISUSE OFMATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES. 4.VIOLATEDSECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULE 17A-3(12)THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TOAPPROPRIATELY CONDUCT AND DOCUMENT BACKGROUND CHECKS OFITS EMPLOYEES PRIOR TO EMPLOYMENT, AND BY FAILING TO PROPERLYRETAIN AND PRESERVE MANUALLY SIGNED FORMS U-4. 5. VIOLATED NYSEARCA OPTIONS RULE 11.18 BY FAILING TO ESTABLISH, MAINTAIN, AND/ORENFORCE APPROPRIATE WRITTEN POLICIES AND PROCEDURES FORSUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, IN THE FOLLOWING AREAS: A. CONDUCTINGAND DOCUMENTING BACKGROUND CHECKS OF ITS EMPLOYEES PRIORTO EMPLOYMENT, INCLUDING MAINTAINING COMPLETE AND ACCURATESIGNED FORMS U-4; B.RETENTION IN PROPER FORMAT AND REVIEW OFBUSINESS-RELATED E-MAILS, INSTANT MESSAGES AND FAXES SENT ORRECEIVED BY ITS EMPLOYEES; AND C. THE PREVENTION OF THE MISUSEOF MATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES.


Resolution:


Sanction Details: CENSURE AND A FINE IN THE AMOUNT OF $20,000

Firm Statement **12/09/2009**DECISION 09-ARCA-12 ISSUED BY NYSE HEARING BOARD.CONSENTED TO FINDINGS: DURING THE PERIOD OF 2006 THROUGH 2007,THE FIRM: (1) VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, ANDRULES 17A-4(B)(4) AND 17A-4(F)THEREUNDER, AND NYSE ARCA OPTIONSRULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL ANDINSTANT MESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT,AND BY FAILING TO PRESERVE BUSINESS-RELATED FAXCOMMUNICATIONS; (2) VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILING TO MAINTAIN A COMPLETE AND ACCURATELIST OF ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECT ORINDIRECT FINANCIAL INTEREST, AND BY FAILING TO OBTAIN, MAINTAINAND REVIEW MONTHLY ACCOUNT STATEMENTS FOR ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST; (3)VIOLATED NYSE ARCA OPTIONS RULE 11.3(A) BY FAILING TO ESTABLISH,MAINTAIN, OR ENFORCE ADEQUATE WRITTEN POLICIES ANDPROCEDURES REASONABLY DESIGNED TO PREVENT THE MISUSE OFMATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES; (4) VIOLATEDSECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULE 17A-3(12)THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TOAPPROPRIATELY CONDUCT AND DOCUMENT BACKGROUND CHECKS OFITS EMPLOYEES PRIOR TO EMPLOYMENT, AND BY FAILING TO PROPERLYRETAIN AND PRESERVE MANUALLY SIGNED FORMS U-4; AND (5) VIOLATEDNYSE ARCA OPTIONS RULE 11.18 BY FAILING TO ESTABLISH, MAINTAIN,AND/OR ENFORCE APPROPRIATE WRITTEN POLICIES AND PROCEDURESFOR SUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, IN THE FOLLOWING AREAS: (A)CONDUCTINGAND DOCUMENTING BACKGROUND CHECKS OF ITS EMPLOYEES PRIORTO EMPLOYMENT, INCLUDING MAINTAINING COMPLETE AND ACCURATESIGNED FORMS U-4; (B)RETENTION IN PROPER FORMAT AND REVIEW OFBUSINESS-RELATED E-MAILS,INSTANT MESSAGES AND FAXES SENT ORRECEIVED BY ITS EMPLOYEES; AND (C) THE PREVENTION OF THE MISUSEOF MATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES.STIPULATED SANCTION: CENSURE AND A FINE IN THE AMOUNT OF $20,000.


Other






**12/09/2009**DECISION 09-ARCA-12 ISSUED BY NYSE HEARING BOARD.CONSENTED TO FINDINGS: DURING THE PERIOD OF 2006 THROUGH 2007,THE FIRM: (1) VIOLATED SECTION 17(A)(1) OF THE EXCHANGE ACT, ANDRULES 17A-4(B)(4) AND 17A-4(F)THEREUNDER, AND NYSE ARCA OPTIONSRULE 11.16(A), BY FAILING TO PRESERVE BUSINESS-RELATED E-MAIL ANDINSTANT MESSAGES IN A NON-REWRITEABLE, NON-ERASABLE FORMAT,AND BY FAILING TO PRESERVE BUSINESS-RELATED FAXCOMMUNICATIONS; (2) VIOLATED NYSE ARCA OPTIONS RULE 11.3-COMMENTARY .03 BY FAILING TO MAINTAIN A COMPLETE AND ACCURATELIST OF ACCOUNTS IN WHICH ITS EMPLOYEES HAD A DIRECT ORINDIRECT FINANCIAL INTEREST, AND BY FAILING TO OBTAIN, MAINTAINAND REVIEW MONTHLY ACCOUNT STATEMENTS FOR ACCOUNTS IN WHICHITS EMPLOYEES HAD A DIRECT OR INDIRECT FINANCIAL INTEREST; (3)VIOLATED NYSE ARCA OPTIONS RULE 11.3(A) BY FAILING TO ESTABLISH,MAINTAIN, OR ENFORCE ADEQUATE WRITTEN POLICIES ANDPROCEDURES REASONABLY DESIGNED TO PREVENT THE MISUSE OFMATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES; (4) VIOLATEDSECTION 17(A)(1) OF THE EXCHANGE ACT, AND RULE 17A-3(12)THEREUNDER, AND NYSE ARCA OPTIONS RULE 11.16(A), BY FAILING TOAPPROPRIATELY CONDUCT AND DOCUMENT BACKGROUND CHECKS OFITS EMPLOYEES PRIOR TO EMPLOYMENT, AND BY FAILING TO PROPERLYRETAIN AND PRESERVE MANUALLY SIGNED FORMS U-4; AND (5) VIOLATEDNYSE ARCA OPTIONS RULE 11.18 BY FAILING TO ESTABLISH, MAINTAIN,AND/OR ENFORCE APPROPRIATE WRITTEN POLICIES AND PROCEDURESFOR SUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, IN THE FOLLOWING AREAS: (A)CONDUCTINGAND DOCUMENTING BACKGROUND CHECKS OF ITS EMPLOYEES PRIORTO EMPLOYMENT, INCLUDING MAINTAINING COMPLETE AND ACCURATESIGNED FORMS U-4; (B)RETENTION IN PROPER FORMAT AND REVIEW OFBUSINESS-RELATED E-MAILS,INSTANT MESSAGES AND FAXES SENT ORRECEIVED BY ITS EMPLOYEES; AND (C) THE PREVENTION OF THE MISUSEOF MATERIAL, NON-PUBLIC INFORMATION BY ITS EMPLOYEES.STIPULATED SANCTION: CENSURE AND A FINE IN THE AMOUNT OF $20,000.

Disclosure 25 of 27

i


Allegations: CUTLER GROUP, LP ("CUTLER"), AN EXCHANGE MEMBER ORGANIZATION,DANIEL KIM ("KIM") AND NEAL SALMEN ("SALMEN"), NOMINEES OF CUTLER,WERE EACH CENSURED AND JOINTLY AND SEVERALLY FINED $75,000. INADDITION, THE BCC ORDERED DISGORGEMENT IN THE AMOUNT OF$135,646 FOR THE FOLLOWING CONDUCT: I) CUTLER, INCLUDING KIM ANDSALMEN EFFECTED NUMEROUS SHORT-TERM FLEX TRANSACTIONS INCONJUNCTION WITH STOCK PURCHASES TO DIRECTLY CIRCUMVENTREGULATION SHO CLOSEOUT OBLIGATIONS; II) CUTLER, INCLUDING KIMAND SALMEN EFFECTED AT LEAST 14 SHORT-TERM FLEX TRANSACTIONSIN CONJUNCTION WITH STOCK SALES TO ASSIST OTHER MARKETPARTICIPANTS TO CIRCUMVENT THEIR REGULATION SHO CLOSE-OUTOBLIGATIONS; III) CUTLER, INCLUDING KIM AND SALMEN FAILED TOLOCATE NUMEROUS SHARES OF REGULATION SHO THRESHOLDSECURITIES. AS A RESULT, CUTLER, INCLUDING KIM AND SALMENIMPROPERLY AVAILED THEMSELVES OF THE REGULATION SHO MARKET-MAKER EXCEPTION TO LOCATE STOCK BEFORE SELLING SHORT ON ATLEAST FORTY-EIGHT (48) OCCASIONS; AND IV) CUTLER FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY PROCEDURES TOENSURE COMPLIANCE WITH SEC REGULATION SHO REQUIREMENTS.(CBOE RULES 4.1, 4.2; REGULATION SHO OF THE SECURITIES EXCHANGEACT OF 1934, AS AMENDED, AND SEC RULE 203(B)(1) AND SEC RULE203(B)(3) THEREUNDER.)















CUTLER GROUP, LP ("CUTLER"), AN EXCHANGE MEMBER ORGANIZATION,DANIEL KIM ("KIM") AND NEAL SALMEN ("SALMEN"), NOMINEES OF CUTLER,WERE EACH CENSURED AND JOINTLY AND SEVERALLY FINED $75,000. INADDITION, THE BCC ORDERED DISGORGEMENT IN THE AMOUNT OF$135,646 FOR THE FOLLOWING CONDUCT: I) CUTLER, INCLUDING KIM ANDSALMEN EFFECTED NUMEROUS SHORT-TERM FLEX TRANSACTIONS INCONJUNCTION WITH STOCK PURCHASES TO DIRECTLY CIRCUMVENTREGULATION SHO CLOSEOUT OBLIGATIONS; II) CUTLER, INCLUDING KIMAND SALMEN EFFECTED AT LEAST 14 SHORT-TERM FLEX TRANSACTIONSIN CONJUNCTION WITH STOCK SALES TO ASSIST OTHER MARKETPARTICIPANTS TO CIRCUMVENT THEIR REGULATION SHO CLOSE-OUTOBLIGATIONS; III) CUTLER, INCLUDING KIM AND SALMEN FAILED TOLOCATE NUMEROUS SHARES OF REGULATION SHO THRESHOLDSECURITIES. AS A RESULT, CUTLER, INCLUDING KIM AND SALMENIMPROPERLY AVAILED THEMSELVES OF THE REGULATION SHO MARKET-MAKER EXCEPTION TO LOCATE STOCK BEFORE SELLING SHORT ON ATLEAST FORTY-EIGHT (48) OCCASIONS; AND IV) CUTLER FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY PROCEDURES TOENSURE COMPLIANCE WITH SEC REGULATION SHO REQUIREMENTS.(CBOE RULES 4.1, 4.2; REGULATION SHO OF THE SECURITIES EXCHANGEACT OF 1934, AS AMENDED, AND SEC RULE 203(B)(1) AND SEC RULE203(B)(3) THEREUNDER.)


Resolution:

Other Sanctions Ordered: DISGORGEMENT IN THE AMOUNT OF $135,646

Sanction Details: A $75,000 JOINT AND SEVERAL FINE, A CENSURE OF EACH SUBJECT ANDDISGORGEMENT IN THE AMOUNT OF $135,646


Decision


Allegations: CUTLER GROUP, LP ("CUTLER"), AN EXCHANGE MEMBER ORGANIZATION,DANIEL KIM ("KIM") AND NEAL SALMEN ("SALMEN"), NOMINEES OF CUTLER,WERE EACH CENSURED AND JOINTLY AND SEVERALLY FINED $75,000. INADDITION, THE BCC ORDERED DISGORGEMENT IN THE AMOUNT OF$135,646 FOR THE FOLLOWING CONDUCT: I) CUTLER, INCLUDING KIM ANDSALMEN EFFECTED NUMEROUS SHORT-TERM FLEX TRANSACTIONS INCONJUNCTION WITH STOCK PURCHASES TO DIRECTLY CIRCUMVENTREGULATION SHO CLOSEOUT OBLIGATIONS; II) CUTLER, INCLUDING KIMAND SALMEN EFFECTED AT LEAST 14 SHORT-TERM FLEX TRANSACTIONSIN CONJUNCTION WITH STOCK SALES TO ASSIST OTHER MARKETPARTICIPANTS TO CIRCUMVENT THEIR REGULATION SHO CLOSE-OUTOBLIGATIONS; III) CUTLER, INCLUDING KIM AND SALMEN FAILED TOLOCATE NUMEROUS SHARES OF REGULATION SHO THRESHOLDSECURITIES. AS A RESULT, CUTLER, INCLUDING KIM AND SALMENIMPROPERLY AVAILED THEMSELVES OF THE REGULATION SHO MARKET-MAKER EXCEPTION TO LOCATE STOCK BEFORE SELLING SHORT ON ATLEAST FORTY-EIGHT (48) OCCASIONS; AND IV) CUTLER FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY PROCEDURES TOENSURE COMPLIANCE WITH SEC REGULATION SHO REQUIREMENTS.(CBOE RULES 4.1, 4.2; REGULATION SHO OF THE SECURITIES EXCHANGEACT OF 1934, AS AMENDED, AND SEC RULE 203(B)(1) AND SEC RULE203(B)(3) THEREUNDER.)







Initiated By: CBOE




CENSURE





CUTLER GROUP, LP ("CUTLER"), AN EXCHANGE MEMBER ORGANIZATION,DANIEL KIM ("KIM") AND NEAL SALMEN ("SALMEN"), NOMINEES OF CUTLER,WERE EACH CENSURED AND JOINTLY AND SEVERALLY FINED $75,000. INADDITION, THE BCC ORDERED DISGORGEMENT IN THE AMOUNT OF$135,646 FOR THE FOLLOWING CONDUCT: I) CUTLER, INCLUDING KIM ANDSALMEN EFFECTED NUMEROUS SHORT-TERM FLEX TRANSACTIONS INCONJUNCTION WITH STOCK PURCHASES TO DIRECTLY CIRCUMVENTREGULATION SHO CLOSEOUT OBLIGATIONS; II) CUTLER, INCLUDING KIMAND SALMEN EFFECTED AT LEAST 14 SHORT-TERM FLEX TRANSACTIONSIN CONJUNCTION WITH STOCK SALES TO ASSIST OTHER MARKETPARTICIPANTS TO CIRCUMVENT THEIR REGULATION SHO CLOSE-OUTOBLIGATIONS; III) CUTLER, INCLUDING KIM AND SALMEN FAILED TOLOCATE NUMEROUS SHARES OF REGULATION SHO THRESHOLDSECURITIES. AS A RESULT, CUTLER, INCLUDING KIM AND SALMENIMPROPERLY AVAILED THEMSELVES OF THE REGULATION SHO MARKET-MAKER EXCEPTION TO LOCATE STOCK BEFORE SELLING SHORT ON ATLEAST FORTY-EIGHT (48) OCCASIONS; AND IV) CUTLER FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY PROCEDURES TOENSURE COMPLIANCE WITH SEC REGULATION SHO REQUIREMENTS.(CBOE RULES 4.1, 4.2; REGULATION SHO OF THE SECURITIES EXCHANGEACT OF 1934, AS AMENDED, AND SEC RULE 203(B)(1) AND SEC RULE203(B)(3) THEREUNDER.)


Resolution:


Sanction Details: 2 TRADERS CENSURED. FIRM CENSURED. DISGORGEMENT OF $135,646AND FINE OF $75,000

Firm Statement WITHOUT ADMITTING OR DENYING ANY EXCHANGE RULES WEREBROKEN. FIRM CONSENTED TO SETTLEMENT FOR SHORT SALES THATWERE ALLEGED TO BE DONE AS NON BONAFIDE MARKET MAKING ANDCBOE ALLEGED INSUFFIENT SUPERVISORY PROCEDURES.


Consent

Disclosure 26 of 27

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Allegations: CUTLER GROUP, LP, AN EXCHANGE MARKET-MAKER ORGANIZATION, WASCENSURED AND FINED $125,000 FOR THE FOLLOWING CONDUCT. CUTLERGROUP: (I) IN NUMEROUS INSTANCES, FAILED TO MAINTAIN CONTINUOUSQUOTES IN 60% OF THE SERIES IN EACH OF ITS APPOINTED OPTIONCLASSES; (II) ON NUMEROUS OCCASIONS, SUBMITTED QUOTES THATFAILED TO MEET THE REQUIRED MINIMUM SIZE OF CONTRACTS IN 61OPTION CLASSES AND (III) ON NUMEROUS OCCASIONS, EXCEEDED THEMAXIMUM ALLOWABLE QUOTE WIDTHS IN 92 OPTION CLASSES. (CBOERULE 8.7 OBLIGATIONS OF MARKET MAKERS.)















CUTLER GROUP, LP, AN EXCHANGE MARKET-MAKER ORGANIZATION, WASCENSURED AND FINED $125,000 FOR THE FOLLOWING CONDUCT. CUTLERGROUP: (I) IN NUMEROUS INSTANCES, FAILED TO MAINTAIN CONTINUOUSQUOTES IN 60% OF THE SERIES IN EACH OF ITS APPOINTED OPTIONCLASSES; (II) ON NUMEROUS OCCASIONS, SUBMITTED QUOTES THATFAILED TO MEET THE REQUIRED MINIMUM SIZE OF CONTRACTS IN 61OPTION CLASSES AND (III) ON NUMEROUS OCCASIONS, EXCEEDED THEMAXIMUM ALLOWABLE QUOTE WIDTHS IN 92 OPTION CLASSES. (CBOERULE 8.7 OBLIGATIONS OF MARKET MAKERS.)


Resolution:


Sanction Details: CUTLER GROUP, L.P. SHALL BE AND HEREBY IS CENSURED AND FINED INTHE AMOUNT OF ONE HUNDRED AND TWENTY-FIVE THOUSAND DOLLARS($125,000).


Decision


Allegations: IT WAS ALLEGED BY THE CHICAGO BOARD OF EXCHANGE (CBOE)THAT WEVIOLATED RULES 8.7D(II)(B) AND 8.7(E)(I) AS WE FAILED TO MAINTAINCONTINUOUS QUOTES IN 60% OF OUR APPOINTED OPTIONS CLASSESFROM FEBRUARY 1ST, 2007 T JULY 31ST, 2007. IT WAS ALSO ALLEGED BYTHE CBOE THAT WE VIOLATED RULES 8.7D(II)(B) AND 8.7(E)(I) AS WEFAILED TO SUBMIT QUOTES REQUIRED TO MEET THE MINIMUM SIZE OFCONTRACTS IN 59 OPTION CLASSES FROM NOVEMBER 1, 2006 TOFEBRUARY 28TH, 2007 AND THE SAME FOR 2 OPTION CLASSES FROMMARCH 1, 2007 TO JULY 31, 2007. LASTLY THAT FROM OCTOBER 1, 2006 TOFEBRUARY 28, 2007 WE EXCEEDED THE MAXIMUM ALLOWABLE QUOTEWIDTH IN 74 OPTION CLASSES AND FROM MARCH 1, 2007 TO JULY 31, 2007WE EXCEEDED THE MAXIMUM ALLOWABLE QUOTE WIDTHS IN 18 OPTIONCLASSES.









Censure


FINE





IT WAS ALLEGED BY THE CHICAGO BOARD OF EXCHANGE (CBOE)THAT WEVIOLATED RULES 8.7D(II)(B) AND 8.7(E)(I) AS WE FAILED TO MAINTAINCONTINUOUS QUOTES IN 60% OF OUR APPOINTED OPTIONS CLASSESFROM FEBRUARY 1ST, 2007 T JULY 31ST, 2007. IT WAS ALSO ALLEGED BYTHE CBOE THAT WE VIOLATED RULES 8.7D(II)(B) AND 8.7(E)(I) AS WEFAILED TO SUBMIT QUOTES REQUIRED TO MEET THE MINIMUM SIZE OFCONTRACTS IN 59 OPTION CLASSES FROM NOVEMBER 1, 2006 TOFEBRUARY 28TH, 2007 AND THE SAME FOR 2 OPTION CLASSES FROMMARCH 1, 2007 TO JULY 31, 2007. LASTLY THAT FROM OCTOBER 1, 2006 TOFEBRUARY 28, 2007 WE EXCEEDED THE MAXIMUM ALLOWABLE QUOTEWIDTH IN 74 OPTION CLASSES AND FROM MARCH 1, 2007 TO JULY 31, 2007WE EXCEEDED THE MAXIMUM ALLOWABLE QUOTE WIDTHS IN 18 OPTIONCLASSES.


Resolution:


Sanction Details: $125,000 AGAINST CUTLER WAS PAID ON 9/20/2007.


Decision

Disclosure 27 of 27

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Allegations: DANIEL S. KIM ("KIM" OR "DKU") WAS AN EXCHANGE MEMBER REGISTEREDTO CONDUCT BUSINESS ON THE EXCHANGE IN ACCORDANCE WITHEXCHANGE RULES AS A MARKET-MAKER AND A NOMINEE OF CUTLERGROUP, L.P. ("CUTLER"), AN EXCHANGE MEMBER ORGANIZATION. KIM ANDCUTLER WERE EACH CENSURED, JOINTLY AND SEVERALLY FINED $15,000AND WERE ORDERED TO PAY DISGORGEMENT IN THE AMOUNT OF $4,500FOR THE FOLLOWING CONDUCT. KIM, ON BEHALF OF CUTLER, ACCEPTEDTHE PURCHASE OF FIFTEEN (15) NEM DEC 40 PUTS AT 90 CENTS AT APRICE SIGNIFICANTLY BELOW PARITY, AND UPON SUCH KNOWLEDGE, KIMFAILED TO TAKE ANY CORRECTIVE ACTIONS TO ENSURE THAT THE ORDERWAS EXECUTED AT AN APPROPRIATE PRICE CONSISTENT WITH JUST ANDEQUITABLE PRINCIPLES OF TRADE. (CBOE RULES 4.1 JUST ANDEQUITABLE PRINCIPLES OF TRADE AND 8.7 OBLIGATIONS OF MARKET-MAKERS.)

PURSUANT TO EXCHANGE RULE 17.10(A), CUTLER AND KIM HAVE UNTILFEBRUARY 1, 2007 TO PETITION THE BOARD OF DIRECTORS FOR REVIEWOF THE BCC'S DECISION. ADDITIONALLY, PURSUANT TO EXCHANGE RULE17.10(C), THE BOARD OF DIRECTORS HAS THE DISCRETION TO ORDER AREVIEW OF THE DECISION ON ITS OWN MOTION, PROVIDED THAT IT DOESSO ON OR PRIOR TO FEBRUARY 16, 2000 (THIRTY DAYS FROM THEISSUANCE OF THE DECISION).















DANIEL S. KIM ("KIM" OR "DKU") WAS AN EXCHANGE MEMBER REGISTEREDTO CONDUCT BUSINESS ON THE EXCHANGE IN ACCORDANCE WITHEXCHANGE RULES AS A MARKET-MAKER AND A NOMINEE OF CUTLERGROUP, L.P. ("CUTLER"), AN EXCHANGE MEMBER ORGANIZATION. KIM ANDCUTLER WERE EACH CENSURED, JOINTLY AND SEVERALLY FINED $15,000AND WERE ORDERED TO PAY DISGORGEMENT IN THE AMOUNT OF $4,500FOR THE FOLLOWING CONDUCT. KIM, ON BEHALF OF CUTLER, ACCEPTEDTHE PURCHASE OF FIFTEEN (15) NEM DEC 40 PUTS AT 90 CENTS AT APRICE SIGNIFICANTLY BELOW PARITY, AND UPON SUCH KNOWLEDGE, KIMFAILED TO TAKE ANY CORRECTIVE ACTIONS TO ENSURE THAT THE ORDERWAS EXECUTED AT AN APPROPRIATE PRICE CONSISTENT WITH JUST ANDEQUITABLE PRINCIPLES OF TRADE. (CBOE RULES 4.1 JUST ANDEQUITABLE PRINCIPLES OF TRADE AND 8.7 OBLIGATIONS OF MARKET-MAKERS.)

PURSUANT TO EXCHANGE RULE 17.10(A), CUTLER AND KIM HAVE UNTILFEBRUARY 1, 2007 TO PETITION THE BOARD OF DIRECTORS FOR REVIEWOF THE BCC'S DECISION. ADDITIONALLY, PURSUANT TO EXCHANGE RULE17.10(C), THE BOARD OF DIRECTORS HAS THE DISCRETION TO ORDER AREVIEW OF THE DECISION ON ITS OWN MOTION, PROVIDED THAT IT DOESSO ON OR PRIOR TO FEBRUARY 16, 2000 (THIRTY DAYS FROM THEISSUANCE OF THE DECISION).


Resolution:

Other Sanctions Ordered: 1. A CENSURE OF EACH RESPONDENT2. A JOINT AND SEVERAL FINE IN THE AMOUNT OF $15,0003. DISGORGEMENT IN THE AMOUNT OF $4,500

Sanction Details: 1. A CENSURE OF EACH RESPONDENT2. A JOINT AND SEVERAL FINE IN THE AMOUNT OF $15,0003. DISGORGEMENT IN THE AMOUNT OF $4,500


Decision


Allegations: IT IS ALLEGED THAT THE ACTS, PRACTICES, AND CONDUCT CONSTITUTEVIOLATIONS OF EXCHANGE RULES 4.1 AND 8.7, BY DANIEL S. KIM ANDCUTLER, IN THAT KIM, ON BEHALF OF CUTLER, ACCEPTED THE PURCHASEOF FIFTEEN (15) NEM DEC 40 PUTS AT 90 CENTS AT A PRICESIGNIFICANTLY BELOW PARITY, AND UPON SUCH KNOWLEDGE, KIMFAILED TO TAKE ANY CORRECTIVE ACTIONS TO ENSURE THAT THE ORDERWAS EXECUTED AT AN APPROPRIATE PRICE CONSISTENT WITH JUST ANDEQUITABLE PRINCIPLES OF TRADE.









Other






IT IS ALLEGED THAT THE ACTS, PRACTICES, AND CONDUCT CONSTITUTEVIOLATIONS OF EXCHANGE RULES 4.1 AND 8.7, BY DANIEL S. KIM ANDCUTLER, IN THAT KIM, ON BEHALF OF CUTLER, ACCEPTED THE PURCHASEOF FIFTEEN (15) NEM DEC 40 PUTS AT 90 CENTS AT A PRICESIGNIFICANTLY BELOW PARITY, AND UPON SUCH KNOWLEDGE, KIMFAILED TO TAKE ANY CORRECTIVE ACTIONS TO ENSURE THAT THE ORDERWAS EXECUTED AT AN APPROPRIATE PRICE CONSISTENT WITH JUST ANDEQUITABLE PRINCIPLES OF TRADE.


Resolution:


Sanction Details: $19,500 FINE WAS LEVIED AGAINST THE FIRM.CONSISTING OF A JOINT AND SEVERAL FINE FOR $15,000 ANDA DISGORGEMENT OF $4,500THE FIRM AND INDIVIDUALS PAID FINE ON MARCH 16, 2007


Decision






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 1


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

FINRA

12/08/2016

16-03545

ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-ERRORS-CHARGES;EXECUTIONS-EXECUTION ERROR; TRADING DISPUTES-OTHER

OPTIONS

$9,400.00

AWARD AGAINST PARTY

11/07/2017

$9,400.01

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.





www.finra.org/awardsonline

https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=16-03545


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CUTLER GROUP, LP

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