The Financial Industry Regulatory Authority (FINRA) today announced its decision on BofA Securities, Inc..) A $24 million fine was imposed for the company's two former traders who participated in more than 700 deceptions in the secondary market for U.S. Treasury bonds and related regulatory failures over a period of more than six years.。

Fraudulent trading involves the use of non-bona fide orders (orders that traders do not intend to execute), creating the illusion of market activity on one side of the market, inducing other market participants to execute orders that are contrary to the bona fide orders entered on the other side of the market。Fraudulent transactions may deceive other market participants into trading at times, prices or quantities that would not otherwise be traded。

From October 2014 to February 2021, Boya Securities, through a former supervisor and a former junior trader, engaged in 717 frauds in U.S. Treasury securities to induce the other party to execute the same Treasury securities or related Treasury futures contracts.。

At least between October 2014 and September 2022, Boya Securities failed to establish and maintain a properly designed surveillance system to detect deception in the U.S. Treasury market.。

It was not until November 2015 that Boya Securities established a supervisory system to detect deception in the Treasury market; until mid-2019, the system was flawed in that it was designed to detect deception by trading algorithms, not manual deception by its traders, such as the 717 cases involved in the settlement.。In addition, until at least December 2020, Boya Securities' monitoring systems did not capture orders from its traders entering certain systems provided by external trading venues.。

Finally, until September 2022, Boya Securities did not monitor potential cross-product deception in Treasuries。

In resolving the matter, Boya Securities agreed with the FMA's findings but did not admit or deny the allegations.。