Notice of Disciplinary Action against Jefferies LLC, Member
Organization
To:Members, Member Organizations, Participants and Participant Organizations

From:John C. Pickford, Assistant General Counsel, NASDAQ PHLXSMDATE:July 18, 2016

Enforcement No. 2016-09
FINRA No. 20140399298
On July 15, 2016, the Business Conduct Committee (the “Committee”) of the NASDAQPHLX LLC (“PHLX” or the “Exchange”) issued a disciplinary decision against Jefferies LLC(“Jefferies” or the “Firm”), a member organization of the Exchange. In response to a
Statement of Charges issued in this action, Jefferies submitted an Offer of Settlement.
Solely to settle this proceeding, and without admitting or denying the charges, Jefferiesconsented to findings that on February 20, 2014, it violated Rule 17a-3(a)(6)(i)promulgated under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), and Exchange Rules 1064(d), 707, 748(h) and 760.
Specifically, Jefferiesconsented to findings that on February 20, 2014, it received a customer spread order inthe options of Sprint Corp (“S”) to purchase 10,455 Feb 6 calls, purchase 10,455 May 5puts, and sell 10,455 May 7 calls. After receiving the customer’s order but before
exposing it to a trading crowd, Jefferies entered an order to purchase, and thereafter
received a partial execution of 8,700 shares of S on an order to purchase, 100,000 sharesof S for its proprietary account to hedge its anticipated facilitation of the customer’s order.
This conduct violated Exchange Rules 1064(d) and 707.
Additionally, Jefferies consented to findings that it had failed to: (i) maintain, or could notprovide any evidence that it maintained, an accurate record of the time it had transmitted
the aforementioned customer options order to a floor broker for representation andsubsequent execution in a trading crowd; and (ii) maintain an accurate record of the order
receipt time of that customer options order. This conduct violated Rule 17a-3(a)(6)(i)promulgated under the Exchange Act, and Exchange Rules 760 and 707.
Finally, the Firm consented to findings that it had failed to: (i) maintain, establish andenforce adequate written supervisory procedures (“WSPs”) and an adequate supervisorysystem for reviewing, and documenting its review of, transactions for anticipatory hedging
based on the undisclosed terms and conditions of impending customer orders;(ii) adhere, and failed to supervise its employees to ensure adherence, to therequirement in its WSPs to confirm prior to execution that order tickets captured, among
other things, the time an order is transmitted for execution; and (iii) maintain an
adequate supervisory system for reviewing electronic order memoranda that wasreasonably calculated to detect erroneous or missing order receipt times. This conduct
violated Exchange Rules 748(h) and 707.

The Committee found that Jefferies had violated Rule 17a-3(a)(6)(i) promulgated under
the Exchange Act and Exchange Rules 1064(d), 707, 748(h) and 760, and ordered theimposition of the following sanctions against Jefferies: (i) a censure; and (ii) a fine in theamount of $50,000.
For more information, contact:
John C. Pickford, Assistant General Counsel, NASDAQ PHLX, at +1 215 496 5273.

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