cobra trading, inc.cobra trading, inc. crd# 132078 sec# 8-66548 main office location 3008 e hebron...

BrokerCheck Report

COBRA TRADING, INC.

Section Title

Report Summary

Firm History

CRD# 132078

1

5

Firm Profile 2 - 4

Page(s)

Firm Operations 6 - 13

Disclosure Events 14

http://www.finra.org

About BrokerCheck®

BrokerCheck offers information on all current, and many former, registered securities brokers, and all current and formerregistered securities firms. FINRA strongly encourages investors to use BrokerCheck to check the background ofsecurities brokers and brokerage firms before deciding to conduct, or continue to conduct, business with them.

· What is included in a BrokerCheck report?· BrokerCheck reports for individual brokers include information such as employment history, professional

qualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards. BrokerCheckreports for brokerage firms include information on a firm’s profile, history, and operations, as well as many of thesame disclosure events mentioned above.

· Please note that the information contained in a BrokerCheck report may include pending actions orallegations that may be contested, unresolved or unproven. In the end, these actions or allegations may beresolved in favor of the broker or brokerage firm, or concluded through a negotiated settlement with noadmission or finding of wrongdoing.

· Where did this information come from?· The information contained in BrokerCheck comes from FINRA’s Central Registration Depository, or

CRD® and is a combination of: o information FINRA and/or the Securities and Exchange Commission (SEC) require brokers and

brokerage firms to submit as part of the registration and licensing process, and o information that regulators report regarding disciplinary actions or allegations against firms or brokers.

· How current is this information?· Generally, active brokerage firms and brokers are required to update their professional and disciplinary

information in CRD within 30 days. Under most circumstances, information reported by brokerage firms, brokersand regulators is available in BrokerCheck the next business day.

· What if I want to check the background of an investment adviser firm or investment adviserrepresentative?

· To check the background of an investment adviser firm or representative, you can search for the firm orindividual in BrokerCheck. If your search is successful, click on the link provided to view the available licensingand registration information in the SEC's Investment Adviser Public Disclosure (IAPD) website athttps://www.adviserinfo.sec.gov. In the alternative, you may search the IAPD website directly or contact yourstate securities regulator at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414.

· Are there other resources I can use to check the background of investment professionals?· FINRA recommends that you learn as much as possible about an investment professional before

deciding to work with them. Your state securities regulator can help you research brokers and investment adviserrepresentatives doing business in your state.

·Thank you for using FINRA BrokerCheck.

For more information aboutFINRA, visit www.finra.org.

Using this site/information meansthat you accept the FINRABrokerCheck Terms andConditions. A complete list ofTerms and Conditions can befound at

For additional information aboutthe contents of this report, pleaserefer to the User Guidance orwww.finra.org/brokercheck. Itprovides a glossary of terms and alist of frequently asked questions,as well as additional resources.

brokercheck.finra.org


https://www.AdviserInfo.sec.gov

http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414


http://brokercheck.finra.org/Support/Terms

COBRA TRADING, INC.

CRD# 132078

SEC# 8-66548

Main Office Location

3008 E HEBRON PKWYBLDG 400CARROLLTON, TX 75010Regulated by FINRA Dallas Office

Mailing Address

3008 E HEBRON PKWYBLDG 400CARROLLTON, TX 75010

Business Telephone Number

(972) 491-7999

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 5

Firm Profile

This firm is classified as a corporation.

This firm was formed in Wisconsin on 05/14/2004.

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 has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 52 U.S. states and territories

www.finra.org/brokercheck User Guidance

1©2021 FINRA. All rights reserved. Report about COBRA TRADING, INC.


http://www.finra.org/brokercheck

http://www.finra.org/brokercheck_reports


This firm is classified as a corporation.

This firm was formed in Wisconsin on 05/14/2004.

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.

COBRA TRADING, INC.

SEC#

132078

8-66548

Main Office Location

Mailing Address

Business Telephone Number

Doing business as COBRA TRADING, INC.

(972) 491-7999

Regulated by FINRA Dallas Office








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?

HESSING, CHADD THOMAS

DIRECTOR, PRESIDENT,EXECUTIVE REP., CFO, FINOP, TREASURER, CCO,SECRETARY

75% or more

No

Individual

03/2004

Yes

2668366

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

KAISLER, BRANDON JOSEPH

CHIEF OPERATING OFFICER

Less than 5%

No

Individual

07/2020

Yes

5354274

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):






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

Indirect Owners

Firm Profile

No information reported.






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, 1 SRO and 52 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 12/17/2004

Self-Regulatory Organization Status Date Effective

FINRA Approved 12/17/2004






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 04/10/2008

Alaska Approved 02/04/2008

Arizona Approved 03/08/2005

Arkansas Approved 01/14/2008

California Approved 01/10/2005

Colorado Approved 01/18/2006

Connecticut Approved 03/28/2008

Delaware Approved 04/03/2008

District of Columbia Approved 03/24/2008

Florida Approved 01/26/2005

Georgia Approved 01/19/2005

Hawaii Approved 05/12/2008

Idaho Approved 01/28/2008

Illinois Approved 03/13/2008

Indiana Approved 03/27/2008

Iowa Approved 09/12/2006

Kansas Approved 04/02/2008

Kentucky Approved 02/14/2008

Louisiana Approved 03/25/2008

Maine Approved 04/07/2008

Maryland Approved 01/15/2008

Massachusetts Approved 06/21/2006

Michigan Approved 03/26/2008

Minnesota Approved 01/11/2005

Mississippi Approved 03/14/2008

Missouri Approved 03/13/2008

Montana Approved 02/04/2008

Nebraska Approved 05/08/2008

Nevada Approved 01/20/2005

New Hampshire Approved 04/11/2008

New Jersey Approved 04/21/2008

New Mexico Approved 02/06/2008

New York Approved 01/10/2005

U.S. States &Territories

Status Date Effective

North Carolina Approved 03/31/2005

North Dakota Approved 03/24/2008

Ohio Approved 04/08/2008

Oklahoma Approved 02/08/2008

Oregon Approved 02/28/2006

Pennsylvania Approved 03/19/2008

Puerto Rico Approved 06/09/2020

Rhode Island Approved 03/24/2008

South Carolina Approved 12/31/2005

South Dakota Approved 03/14/2008

Tennessee Approved 01/22/2008

Texas Approved 02/07/2005

Utah Approved 10/02/2007

Vermont Approved 03/14/2008

Virginia Approved 09/20/2006

Washington Approved 10/03/2005

West Virginia Approved 03/27/2008

Wisconsin Approved 01/03/2005

Wyoming Approved 03/25/2008






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.

This firm currently conducts 3 types of businesses.

Types of Business

Broker or dealer retailing corporate equity securities over-the-counter

Put and call broker or dealer or option writer

Non-exchange member arranging for transactions in listed securities by exchange member






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 refer or introduce customers to other brokers and dealers.

Name: WEDBUSH SECURITIES INC.

Business Address: 1000 WILSHIRE BLVD. SUITE 900LOS ANGELES, CA 90017-2457

CRD #: 877

Effective Date: 08/20/2012

Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH WEDBUSH SECURITIES ("WS") WHEREBYWS WILL ACT AS COBRA'S CLEARING BROKER/DEALER. UNDER THISARRANGEMENT WS WILL PROVIDE EXECUTION SERVICES, MAINTAINCERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACK OFFICE,MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SEC RULES17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.

Name: INTERACTIVE BROKERS LLC

Business Address: ONE PICKWICK PLAZA-2ND FL.GREENWICH, CT 06830

CRD #: 36418


Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH INTERACTIVE BROKERS, LLC ("IB")WHEREBY IB WILL ACT AS COBRA'S CLEARING BROKER/DEALER.UNDER THIS ARRANGEMENT IB WILL PROVIDE EXECUTION SERVICES,MAINTAIN CERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACKOFFICE, MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SECRULES 17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.






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.



CRD #: 877





CRD #: 36418


Description: COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATE D ACLEARING AGREEMENT WITH INTERACTIVE BROKERS LLC ("IB")WHEREBY IB WILL ACT AS COBRA'S CLEARING BROKER/DEALER.UNDER THIS ARRANGEMENT IB WILL PROVIDE EXECUTION SERVICES,MAINTAIN CERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACKOFFICE, MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SECRULES 17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.



CRD #: 877

Effective Date: 08/20/201210©2021 FINRA. All rights reserved. Report about COBRA TRADING, INC.





Firm Operations

Industry Arrangements (continued)

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





CRD #: 36418





CRD #: 877








Firm Operations

Industry Arrangements (continued)

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

COBRA TRADING, INC. ("COBRA") WILL ACT AS AN "INTRODUCINGBROKER/DEALER". IN THIS REGARD, COBRA HAS NEGOTIATED ACLEARING AGREEMENT WITH WEDBUSH SECURITIES ("WS") WHEREBYWS WILL ACT AS COBRA'S CLEARING BROKER/DEALER. UNDER THISARRANGEMENT WS WILL PROVIDE EXECUTION SERVICES, MAINTAINCERTAIN CUSTOMER ACCOUNTS, ACT AS COBRA'S BACK OFFICE,MAINTAIN CERTAIN BOOKS AND RECORDS REQUIRED BY SEC RULES17A-3 AND 17A-4 AND PROVIDE SAFE-KEEPING SERVICES WHENREQUIRED.



CRD #: 36418








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 5 0






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.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ 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 5

Reporting Source: Regulator

Allegations: MINOR RULE PLAN VIOLATIONS: BETWEEN SEPTEMBER 30, 2005 ANDAPRIL 2, 2018, COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTERITS CHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIES PRINCIPALWITH THE EXCHANGE.

Current Status: Final






Initiated By: NYSE ARCA, INC.

Principal Sanction(s)/ReliefSought:

Other Sanction(s)/ReliefSought:

Date Initiated: 02/26/2019

Docket/Case Number: 2018059274401

Principal Product Type: No Product

Other Product Type(s):

Allegations: MINOR RULE PLAN VIOLATIONS: BETWEEN SEPTEMBER 30, 2005 ANDAPRIL 2, 2018, COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTERITS CHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIES PRINCIPALWITH THE EXCHANGE.

Resolution Date: 03/05/2019

Resolution:

Other Sanctions Ordered:

Sanction Details: THE FIRM WAS CENSURED AND FINED $3,500. THIS MATTER WILL BECOMEFINAL FIVE BUSINESS DAYS AFTER THE ISSUANCE OF THIS DECISION.THEREFORE, THIS MATTER BECAME FINAL MARCH 5, 2019.

MINOR RULE PLAN VIOLATIONS: BECAUSE THE FINE BEING IMPOSEDEXCEEDS $2,500, SUCH FINE IS REQUIRED TO BE REPORTED BY THE FIRMON THE FORM BD. A FAILURE TO REPORT THE FINE ON THE FORM BDCOULD SUBJECT THE FIRM TO FURTHER DISCIPLINARY ACTION.

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

No

Sanctions Ordered: Monetary/Fine $3,500.00

Other

iReporting Source: Firm

Allegations: BETWEEN SEPTEMBER 30, 2005 AND APRIL 2, 2018,COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTER ITSCHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIESPRINCIPAL WITH THE EXCHANGE IN VIOLATION OF NYSE ARCA RULE 11.18(D).







Initiated By: NYSE ARCA


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



Docket/Case Number: STAR NO. 20180592744



BETWEEN SEPTEMBER 30, 2005 AND APRIL 2, 2018,COBRA TRADING, INC. (THE "FIRM") FAILED TO REGISTER ITSCHIEF COMPLIANCE OFFICER AS A GENERAL SECURITIESPRINCIPAL WITH THE EXCHANGE IN VIOLATION OF NYSE ARCA RULE 11.18(D).


Resolution:

Other Sanctions Ordered: NOT APPLICABLE.

Sanction Details: NOT APPLICABLE.

Firm Statement THE FIRM CONSENTS TO THE IMPOSITION OF THE FINE FOR MINOR RULEPLAN VIOLATIONS.

Sanctions Ordered: Monetary/Fine $3,500.00

Consent

Disclosure 2 of 5

i


Allegations: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, COBRA TRADING,INC. ("COBRA TRADING" OR "FIRM") CONSENTED TO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT FAILED TO HAVE CONTROLS ANDSUPERVISORY PROCEDURES REASONABLY DESIGNED TO PREVENT THEENTRY OF ORDERS THAT EXCEEDED APPROPRIATE PRE-SET CREDITTHRESHOLDS. THE FINDINGS STATED THAT THE FIRM FAILED TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ERRONEOUS ORDERS BY REJECTINGORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS, ON ANORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY SYSTEMS AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE COMPLIANCE.







Initiated By: NYSE ARCA, INC.




Docket/Case Number: 2017-10-00061

Principal Product Type: Other

Other Product Type(s): UNSPECIFIED SECURITIES

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, COBRA TRADING,INC. ("COBRA TRADING" OR "FIRM") CONSENTED TO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT FAILED TO HAVE CONTROLS ANDSUPERVISORY PROCEDURES REASONABLY DESIGNED TO PREVENT THEENTRY OF ORDERS THAT EXCEEDED APPROPRIATE PRE-SET CREDITTHRESHOLDS. THE FINDINGS STATED THAT THE FIRM FAILED TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ERRONEOUS ORDERS BY REJECTINGORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS, ON ANORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY SYSTEMS AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE COMPLIANCE.


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED AND FINED $20,000.COBRA TRADING SHALL UNDERTAKE TO ADDRESS ANY REMAININGMARKET ACCESS RULE DEFICIENCIES DESCRIBED IN THE DECISION TOENSURE THAT IT HAS IMPLEMENTED CONTROLS AND PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE RULES ANDREGULATIONS CITED HEREIN PERTAINING TO MARKET ACCESSREQUIREMENTS.

Regulator Statement COBRA TRADING VIOLATED: (I) RULE 15C3-5(C)(1)(Í), BY FAILING TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ORDERS THAT EXCEEDED APPROPRIATEPRE-SET CREDIT THRESHOLDS; (II) RULE 15C3-5(C)(1)(II), BY FAILING TOHAVE CONTROLS AND SUPERVISORY PROCEDURES REASONABLYDESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS BYREJECTING ORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS,ON AN ORDER-BY-ORDER BASIS, OR OVER A SHORT PERIOD; AND (III)NYSE ARCA EQUITIES RULES 6.18(B) AND (C), BY FAILING TO ESTABLISHAND MAINTAIN ADEQUATE SUPERVISORY SYSTEMS AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH RULE 15C3-5.


No

Sanctions Ordered: CensureMonetary/Fine $20,000.00

Decision & Order of Offer of Settlement






COBRA TRADING VIOLATED: (I) RULE 15C3-5(C)(1)(Í), BY FAILING TO HAVECONTROLS AND SUPERVISORY PROCEDURES REASONABLY DESIGNEDTO PREVENT THE ENTRY OF ORDERS THAT EXCEEDED APPROPRIATEPRE-SET CREDIT THRESHOLDS; (II) RULE 15C3-5(C)(1)(II), BY FAILING TOHAVE CONTROLS AND SUPERVISORY PROCEDURES REASONABLYDESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS BYREJECTING ORDERS THAT EXCEED APPROPRIATE PRICE PARAMETERS,ON AN ORDER-BY-ORDER BASIS, OR OVER A SHORT PERIOD; AND (III)NYSE ARCA EQUITIES RULES 6.18(B) AND (C), BY FAILING TO ESTABLISHAND MAINTAIN ADEQUATE SUPERVISORY SYSTEMS AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH RULE 15C3-5.


Initiated By: NYSE ARCA


Censure


A FINE IN THE AMOUNT OF $20,000 AND AN UNDERTAKING TO REMEDIATETHE DEFICIENCIES CONCERNING ITS PRE-TRADE CREDIT ANDERRONEOUS ORDER CONTROLS.


Docket/Case Number: 2017-10-00061

Principal Product Type: Equity Listed (Common & Preferred Stock)


Allegations: THIS MATTER INVOLVES VIOLATIONS OF RULE L5C3-5 UNDER THESECURITIES EXCHANGE ACT OF 1934 (17 CFR §240.15C3-5) ("RULE 15C3-5,"OR THE "MARKET ACCESS RULE") AND NYSE ARCA RULE 11.18.THE VIOLATIONS OF RULE 15C3-5 AROSE OUT OF THE FIRM'S FAILURE TOEXERCISE REASONABLE CONTROL OVER ITS RISK MANAGEMENTCONTROLS; RATHER, THE FIRM RELIED ON THIRD PARTIES FOR THEIMPLEMENTATION OF THOSE CONTROLS, INCLUDING ORDERMANAGEMENT SYSTEM ("OMS") PROVIDERS AND ITS CLEARING FIRM.VIOLATIONS WERE THE FOLLOWING:1.RULE 15C3-5(C)(I)(I) BY FAILING TO ESTABLISH, DOCUMENT, ANDMAINTAIN RISK MANAGEMENT CONTROLS AND SUPERVISORYPROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THEENTRY OF ORDERS THAT EXCEEDED APPROPRIATE PRE-SET CREDITTHRESHOLDS;2.RULE 15C3-5(C)(L)(II) BY FAILING TO ESTABLISH, DOCUMENT, ANDMAINTAIN RISK MANAGEMENT CONTROLS AND SUPERVISORYPROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THEENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEEDAPPROPRIATE PRICE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OROVER A SHORT PERIOD OF TIME; AND3.NYSE ARCA RULE 11.18 (B) AND (C) BY FAILING TO ESTABLISH ANDMAINTAIN ADEQUATE SUPERVISORY SYSTEMS AND WRITTENPROCEDURES THAT WERE REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH RULE 15C3-5.








Resolution:

Other Sanctions Ordered: IN CONNECTION WITH THE UNDERTAKING, THE FIRM AGREES TOUNDERTAKE TO ADDRESS ANY REMAINING MARKET ACCESS RULEDEFICIENCIES DESCRIBED IN THIS OFFER OF SETTLEMENT ANDCONSENT TO ENSURE THAT IT HAS IMPLEMENTED CONTROLS ANDPROCEDURES THAT ARE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE RULES AND REGULATIONS CITED HEREINPERTAINING TO MARKET ACCESS REQUIREMENTS WITHIN 90 DAYS OFACCEPTANCE OF THE OFFER OF SETTLEMENT.

Sanction Details: THIS ITEM IS NOT APPLICABLE.

Firm Statement COBRA TRADING ("COBRA") IS WORKING WITH ITS THIRD-PARTYSOFTWARE PROVIDERS TO ADDRESS ANY NOTED DEFICIENCIES IN THEIRRISK MANAGEMENT CONTROLS. COBRA WILL ALSO WORK TO IMPLEMENTANY NEW RISK CONTROLS ADDED BY THE PROVIDERS. IN ADDITION TOTHE FIRM'S RELIANCE ON THIRD-PARTIES FOR ENFORCEMENT OF THESECONTROLS, COBRA HAS, SINCE THIRD QUARTER 2018, APPLIED ALL RISKCONTROL SETTINGS ON A CASE-BY-CASE BASIS AS ACCOUNTS AREOPENED. COBRA ALSO TESTS AND REVIEWS CONTROLS ON AQUARTERLY BASIS INTERNALLY.


Acceptance, Waiver & Consent(AWC)

Disclosure 3 of 5

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS ASSHORT. THE FINDINGS STATED THAT THE FIRM ACCEPTED A SHORT SALEORDER IN AN EQUITY SECURITY FROM ANOTHER PERSON, OR EFFECTEDA SHORT SALE IN AN EQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUTBORROWING THE SECURITY, OR ENTERING INTO A BONA-FIDEARRANGEMENT TO BORROW THE SECURITY; OR HAVING REASONABLEGROUNDS TO BELIEVE THAT THE SECURITY COULD BE BORROWED SOTHAT IT COULD BE DELIVERED ON THE DATE DELIVERY IS DUE; ANDDOCUMENTING COMPLIANCE WITH SEC RULE 203(B)(1) OF REGULATIONSHO. THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLESECURITIES LAWS AND REGULATIONS CONCERNING THE FIRM'SCOMPLIANCE WITH SEC RULES 200(G) AND 203(B)(1) OF REGULATIONSHO.







Initiated By: FINRA







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS ASSHORT. THE FINDINGS STATED THAT THE FIRM ACCEPTED A SHORT SALEORDER IN AN EQUITY SECURITY FROM ANOTHER PERSON, OR EFFECTEDA SHORT SALE IN AN EQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUTBORROWING THE SECURITY, OR ENTERING INTO A BONA-FIDEARRANGEMENT TO BORROW THE SECURITY; OR HAVING REASONABLEGROUNDS TO BELIEVE THAT THE SECURITY COULD BE BORROWED SOTHAT IT COULD BE DELIVERED ON THE DATE DELIVERY IS DUE; ANDDOCUMENTING COMPLIANCE WITH SEC RULE 203(B)(1) OF REGULATIONSHO. THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLESECURITIES LAWS AND REGULATIONS CONCERNING THE FIRM'SCOMPLIANCE WITH SEC RULES 200(G) AND 203(B)(1) OF REGULATIONSHO.


Resolution:

Other Sanctions Ordered: UNDERTAKING: REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES.

Sanction Details: THE FIRM WAS CENSURED, FINED $32,500, AND UNDERTAKES TO REVISEITS WRITTEN SUPERVISORY PROCEDURES. FINE PAID IN FULL JULY 15,2015.


No




Allegations: IN CONNECTION WITH MATTER NO. 20110288105 AND 20130358426, THESHORT SALES TEAM OF THE DEPARTMENT OF MARKET REGULATION (THE "STAFF") REVIEWED THE FIRM'S COMPLIANCE WITH SEC RULES 200(G)AND 203(B)(1) OF REGULATION SHO DURING THE PERIOD FROM MARCH14, 2011 THROUGH NOVEMBER 1, 2011, AND FEBRUARY 5, 2013.

IN CONNECTION WITH MATTER NO. 20110288105:

1. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 2,139 SHORTSALE ORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT.THE CONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATEAND DISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.

2. DURING THE PERIOD REVIEWED, THE FIRM, ON 2,137 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.


3. DURING THE PERIOD REVIEWED, THE FIRM EXECUTED 16 SHORT SALEORDERS AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT. THECONDUCT DESCRIBED IN THIS PARAGRAPH CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF SEC RULE 200(G) OF REGULATION SHO.

4. DURING THE PERIOD REVIEWED, THE FIRM, ON 16 OCCASIONS,ACCEPTED A SHORT SALE ORDER IN AN EQUITY SECURITY FROMANOTHER PERSON, OR EFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT: (1) BORROWING THE SECURITY, ORENTERING INTO A BONA-FIDE ARRANGEMENT TO BORROW THE SECURITY;OR (2) HAVING REASONABLE GROUNDS TO BELIEVE THAT THE SECURITYCOULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATEDELIVERY IS DUE; AND (3) DOCUMENTING COMPLIANCE WITH SEC RULE203(B)(1) OF REGULATION SHO. THE CONDUCT DESCRIBED IN THISPARAGRAPH CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SECRULE 203(B)(1) OF REGULATION SHO.

IN CONNECTION WITH STAR NOS. 20110288105 AND 20130358426:

5. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONSCONCERNING THE FIRM'S COMPLIANCE WITH SEC RULES 200(G) AND200(B)(1) OF REGULATION SHO. SPECIFICALLY, THE FIRM'S SUPERVISORYSYSTEM DID NOT INCLUDE WRITTEN SUPERVISORY PROCEDURESPROVIDING FOR: (1) THE IDENTIFICATION OF THE PERSON(S)RESPONSIBLE FOR SUPERVISION WITH RESPECT TO THE APPLICABLERULES; (2) A STATEMENT OF THE SUPERVISORY STEP(S) TO BE TAKEN BYTHE IDENTIFIED PERSON(S); (3) A STATEMENT AS TO HOW OFTEN SUCHPERSON(S) SHOULD TAKE SUCH STEP(S); AND (4) A STATEMENT AS TOHOW THE COMPLETION OF THE STEP(S) INCLUDED IN THE WRITTENSUPERVISORY PROCEDURES SHOULD BE DOCUMENTED. THE CONDUCTDESCRIBED IN THIS PARAGRAPH CONSTITUTES A VIOLATION OF NASDRULE 3010 AND FINRA RULE 2010.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2011028810501


IN CONNECTION WITH MATTER NO. 20110288105 AND 20130358426, THESHORT SALES TEAM OF THE DEPARTMENT OF MARKET REGULATION (THE "STAFF") REVIEWED THE FIRM'S COMPLIANCE WITH SEC RULES 200(G)AND 203(B)(1) OF REGULATION SHO DURING THE PERIOD FROM MARCH14, 2011 THROUGH NOVEMBER 1, 2011, AND FEBRUARY 5, 2013.














Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)


Censure


PAY MONETARY FINE IN THE AMOUNT OF $32,500 AND CERTAINUNDERTAKINGS PURSUANT TO THE ORDER.


Docket/Case Number: CASE NO. 2011028810501



IN CONNECTION WITH MATTER NO. 20110288105 AND 20130358426, THESHORT SALES TEAM OF THE DEPARTMENT OF MARKET REGULATION (THE "STAFF") REVIEWED THE FIRM'S COMPLIANCE WITH SEC RULES 200(G)AND 203(B)(1) OF REGULATION SHO DURING THE PERIOD FROM MARCH14, 2011 THROUGH NOVEMBER 1, 2011, AND FEBRUARY 5, 2013.










Resolution:

Other Sanctions Ordered: PURSUANT TO CERTAIN PROVISIONS, THE FIRM WILL REVISE ITSSUPERVISORY PROCEDURES TO ADDRESS THE DEFICIENCIESDESCRIBED IN THE ORDER'S FINDINGS, AND PROVIDE FINRA THE DATE OFIMPLEMENTATION.

Sanction Details: FIRM PAID MONETARY FINE IN THE AMOUNT OF $32,500 ON 7/9/2015.

Firm Statement WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM ACCEPTSAND CONSENTS TO THE ENTRY OF THIS ORDER. IN ADDITION TO PAYINGTHE MONETARY FINE OF $32,500, THE FIRM HAS MADE AN UNDERTAKINGTO PROVIDE A REPRESENTATION THAT IT HAS REVISED ITS WRITTENSUPERVISORY PROCEDURES PURSUANT TO THE REQUIREMENTS OF THEORDER AND WILL PROVIDE THE DATE THE PROCEDURES WEREIMPLEMENTED. SUCH INFORMATION SHALL BE SUBMITTED WITHIN 30DAYS OF THE DATE OF THE ACCEPTANCE, WAIVER CONSENT.



Disclosure 4 of 5

i






Disclosure 4 of 5


Initiated By: FINRA


Other


N/A





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOADEQUATELY IMPLEMENT ANTI-MONEY LAUNDERING (AML) POLICIES ANDPROCEDURES REASONABLY EXPECTED TO DETECT AND CAUSE THEREPORTING OF SUSPICIOUS TRANSACTIONS. THE FINDINGS STATED THATTHE FIRM FAILED TO IDENTIFY AND CONDUCT FURTHER DUE DILIGENCEON THE POTENTIALLY SUSPICIOUS ACTIVITY WHILE CONDUCTINGTRANSACTIONAL REVIEWS IN ITS CUSTOMERS' ACCOUNTS. THE FINDINGSALSO STATED THAT THE FIRM FAILED TO IMPLEMENT AN ADEQUATECUSTOMER IDENTIFICATION PROGRAM (CIP) FOR NEW ACCOUNTS. WHENTHE FIRM'S CIP REVIEW REVEALED INCONSISTENT IDENTIFYINGINFORMATION, THE FIRM DID NOT EMPLOY REASONABLE PROCEDURESTO ADDRESS THOSE INCONSISTENCIES TO FORM A REASONABLE BELIEFTHAT IT KNEW THE TRUE IDENTITY OF THE CUSTOMER. THE FINDINGSALSO INCLUDED THAT THE FIRM MOVED CUSTOMER TRANSACTIONS INTOTHE FIRM'S EXEMPT ERROR ACCOUNT SO THAT THE FIRM'S CUSTOMERSCOULD AVOID ADDITIONAL MARGIN ASSESSED BY ITS CLEARING FIRM ONINDIVIDUAL SECURITIES.



Resolution:


No










Sanction Details: THE FIRM IS CENSURED AND FINED $150,000. FINE PAID IN FULL ONMARCH 4, 2015.



Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY








Allegations: FROM JANUARY 6, 2009 THROUGH SEPTEMBER 3, 2013 ("RELEVANT TIMEPERIOD"), COBRA HAD VARIOUS FAILURES RELATED TO THEIMPLEMENTATION OF ITS ANTI-MONEY LAUNDERING ("AML")PROCEDURES. MORE SPECIFICALLY, COBRA FAILED TO ADEQUATELY: (1)IMPLEMENT AML POLICIES AND PROCEDURES REASONABLY EXPECTEDTO DETECT AND CAUSE THE REPORTING OF SUSPICIOUS TRANSACTIONS;AND (2) IMPLEMENT AN ADEQUATE CUSTOMER IDENTIFICATION PROGRAM("CIP") FOR NEW ACCOUNTS. IN ADDITION, COBRA MOVED CUSTOMERTRANSACTIONS INTO THE FIRM'S EXEMPT ERROR ACCOUNT SO THAT THEFIRM'S CUSTOMERS COULD AVOID ADDITIONAL MARGIN ASSESSED BYCOBRA'S CLEARING FIRM ON INDIVIDUAL SECURITIES. AS A RESULT OFTHE FOREGOING, COBRA VIOLATED NASD RULE 3011 (FOR THE PERIODBEFORE JANUARY 1, 2010), FINRA RULE 3310 (FOR THE PERIOD ON ORAFTER JANUARY 1, 2010), AND FINRA RULE 2010.



Resolution:











Sanction Details: APPLICANT, COBRA TRADING, INC. WAS CENSURED AND FINED $150,000BY FINRA AND PAID SUCH FINE IN FULL ON MARCH 4, 2015.

Firm Statement APPLICANT, COBRA TRADING, INC. SIGNED THE FINAL AWC LETTER DATEDFEBRUARY 17, 2015 AND PAID THE FINE IMPOSED IN THE LETTER.APPLICANT HAS TAKEN CORRECTIVE STEPS TO ADDRESS THE FAILURESCITED IN THE AWC LETTER TO PREVENT RECURRENCE.

Disclosure 5 of 5

i


Initiated By: FINRA







Allegations: SEC RULE 203(B)(1) OF REGULATION SHO - COBRA TRADING, INC., ONNUMEROUS OCCASIONS, ACCEPTED A SHORT SALE ORDER IN AN EQUITYSECURITY FROM ANOTHER PERSON, OR EFFECTED A SHORT SALE IN ANEQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUT BORROWING THESECURITY OR ENTERING INTO A BONA FIDE ARRANGEMENT TO BORROWTHE SECURITY; OR HAVING REASONABLE GROUNDS TO BELIEVE THESECURITY COULD BE BORROWED SO THAT IT COULD BE DELIVERED ONTHE DATE DELIVERY IS DUE; AND DOCUMENTING COMPLIANCE WITH SECRULE 203(B)(1) OF REGULATION SHO.



Resolution:


No








Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $8.500.


No



Initiated By: FINRA








Allegations: SEC RULE 203(B)(1) OF REGULATION SHO - COBRA TRADING, INC., ONNUMEROUS OCCASIONS, ACCEPTED A SHORT SALE ORDER IN AN EQUITYSECURITY FROM ANOTHER PERSON, OR EFFECTED A SHORT SALE IN ANEQUITY SECURITY FOR ITS OWN ACCOUNT, WITHOUT BORROWING THESECURITY OR ENTERING INTO A BONA FIDE ARRANGEMENT TO BORROWTHE SECURITY; OR HAVING REASONABLE GROUNDS TO BELIEVE THESECURITY COULD BE BORROWED SO THAT IT COULD BE DELIVERED ONTHE DATE DELIVERY IS DUE; AND DOCUMENTING COMPLIANCE WITH SECRULE 203(B)(1) OF REGULATION SHO.



Resolution:









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $8.500.

Firm Statement IN RESPONSE TO THE FINRA AWC FINDINGS, COBRA TRADING HASIMMEDIATELY CEASED OBTAINING LOCATES FROM LOCATESTOCK.COM.COBRA TRADING HAD RELIED ON A NOTICE FROM PENSON FINANCIALSTATEMENT THAT THEY HAD ENTERED INTO AN AGREEMENT TO USELOCATESTOCK.COM. WITHOUT NOTICE OF TERMINATION FROM EITHERPENSON FINANCIAL SERVICES OR LOCATESTOCK.COM, COBRA TRADINGCONTINUED TO RELY ON THIS STATEMENT. COBRA TRADING WASVERBALLY TOLD THAT IT DID NOT MATTER IF THEY OBTAINED THELOCATESTOCK.COM LOCATE THROUGH PENSON FINANCIAL OR IF THEYDEALT DIRECTLY WITH THE ONLINE PORTAL PROVIDED BYLOCATESTOCK.COM. COBRA TRADING HAS WRITTEN CONFIRMATION OFLOCATES THAT WERE APPROVED BY PENSON FINANCIAL WHICH THEYRECEIVED FROM LOCATESTOCK.COM. COBRA TRADING WAS UNAWAREOF FINRA'S POSITION ON LOCATES OBTAINED FROM LOCATESTOCK.COMUNTIL THIS FINAL AWC WHICH DID NOT ACKNOWLEDGE THE VALIDITY OFCOBRA TRADINGS PAID BORROWS FROM LOCATESTOCK.COM.IMMEDIATELY, UPON RECEIPT OF THIS REFERENCED AWC, COBRATRADING CEASED ITS USE OF LOCATESTOCK.COM. IT WAS COBRATRADINGS BELIEF THAT THE FIRM HAD OBTAINED A VALID BORROW WITHWRITTEN AND VERBAL STATEMENTS FROM BOTH LOCATESTOCK.COMAND PENSON FINANCIAL SERVICES.







End of Report

This page is intentionally left blank.





cobra trading, inc.cobra trading, inc. crd# 132078 sec# 8-66548 main office location 3008 e hebron...

Documents