$5M Fine Shows the Cost of Inaccurate Marketing
SEC Releases
Introduction
On September 18, 2025, the SEC announced a $5 Million Civil Penalty against a well-known Broker/Dealer for misrepresenting the accuracy and speed of its U.S. options market data. This action highlights the critical importance of truthful communication and reinforces the need for robust compliance monitoring.
Violations That Occurred
The SEC found that the Broker/Dealer violated Section 17(a)(2) of the Securities Act of 1933 by making materially misleading statements about the speed and accuracy of its market data.
The Broker/Dealer had publicly claimed that its options data was “real-time,” “current,” and delivered “in fractions of seconds,” while in reality, significant delays occurred frequently during peak trading periods.
How These Violations Occurred
During high-volume periods, especially market opens, the Broker/Dealer’s systems struggled to keep up with data demand. These delays were:
- Frequent: Occurring on approximately half of all trading days during the review period.
- Severe: Averaging 23 seconds, with some delays exceeding 2 minutes.
- Material: In some cases, data shown to customers lagged behind real-time prices by 7–13%, impacting trade decisions.
Although internal teams were aware of the issue and raised concerns, the Broker/Dealer did not sufficiently update its disclosures or notify all affected customers.
Some limited notifications were issued, but marketing materials continued to present a misleading picture of the data’s timeliness.
How These Violations Can Be Prevented
To avoid similar regulatory exposure, Firms should:
- Ensure Accurate Marketing: Claims about speed, accuracy, or “real-time” data must reflect actual system performance, including limitations.
- Implement Transparent Disclosures: Communicate known issues and limitations clearly and promptly to all affected users.
- Empower Compliance Oversight: Equip compliance teams with the tools and authority to flag, escalate, and act on operational risks.
Vigilant’s Conclusion
This case is a reminder that even technologically sophisticated Firms can run afoul of SEC rules if compliance doesn’t keep pace.
At Vigilant, we specialize in helping Firms identify operational risks, align marketing with regulatory expectations, and build a culture of proactive compliance.
Whether through policy review, system monitoring strategies, or training, Vigilant can help your Firm stay ahead of regulatory scrutiny. Proactive compliance protects your Firm, do not wait for regulators to make the first move.