Notice, Pursuant to Exchange By-law 18-2, of Disciplinary
Action Against Bedrock Trading, Ltd., Member Organization
To:Members, Member Organizations, Participants and Participant Organizations

From:

John C. Pickford, Enforcement Counsel, NASDAQ OMX PHLXSM

DATE:December 29, 2010

NASDAQ OMX PHLX No. 10-22
Enforcement No. 2010-21
On December 21, 2010, the Business Conduct Committee (the “Committee”) issued adisciplinary decision against Bedrock Trading, Ltd. (“Bedrock” or the “Firm”), a member
organization of the Exchange. In response to a Statement of Charges issued in thisaction, Bedrock submitted an Offer of Settlement, Stipulation of Facts and Consent toSanctions (“Offer”). Solely to settle this proceeding, and without admitting or denying thecharges, Bedrock consented to findings that during the period June 1, 2008 and June 30,2009 (the “Relevant Period”), it had violated Sections 15 and 17 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), Rules 15b3-1, 17a-3, 17a3(a)(2), 17a-3(a)(19)(ii), 17a-5, and Rule 200(g) of Regulation SHO promulgated under
the Exchange Act, and Exchange Rules 703, 748(g), 757, 760, and 761, by: (i) failing tokeep accurate books and records; (ii) filing an inaccurate Financial and Operational
Combined Uniform Single Report with the Exchange; (iii) failing to secure from, andmaintain a written record, properly dated and executed by, one of its associated persons,reflecting such associated person’s compensation agreement with Bedrock; (iv) failing toamend its Uniform Application for Broker-Dealer Registration to reflect the disciplinary
decisions rendered against Bedrock in two previous PHLX Enforcement matters (PHLX No.
2008-06 on May 28, 2008 and PHLX No. 2009-24 on November 16, 2009), the violations
charged, and the sanctions that had been imposed upon the Firm; (v) mismarking twoorders to sell equity securities as “sell short” rather than “sell long;” (vi) failing to document,or otherwise ensure, that one of its employees had attended its 2009 annual anti-money
laundering compliance training program; (vii) failing to maintain an accurate record of themonthly brokerage account statements of its employees, in that its master list of employee
brokerage accounts had failed to reflect three brokerage accounts of an employee that had
been held away from the Firm; (viii) failing to establish, maintain and enforce written
supervisory procedures (“WSPs”), and a system for applying such procedures, thatreasonably addressed compliance with the requirements of Regulation SHO promulgatedunder the Exchange Act regarding adoption of a written organizational plan; the strategies
and objectives of, and the assignment of traders to, aggregation units, and determinationof net positions within aggregation units; and (ix) failing to comply, and enforcecompliance with, its own WSPs that required employees to complete an Annual
Certification Form, disclosing, among other things, their outside business affiliations andactivities and personal securities accounts, and to conduct a monthly review of its
electronic communications. Specifically, Bedrock had failed to ensure that all employeeshad completed the required Annual Certification Form, and to review all of its electroniccommunications on a monthly basis.
Bedrock’s Offer was accepted by the Committee and was the basis of its Decision. TheCommittee found that Bedrock had violated Sections 15 and 17 of the Exchange Act,Rules 15b3-1, 17a-3, 17a-3(a)(2), 17a-3(a)(19)(ii), 17a-5, and Rule 200(g) of Regulation
SHO promulgated under the Exchange Act, and Exchange Rules 703, 748(g), 757, 760,
and 761, concurred in the sanctions consented to by it, and ordered the imposition of thefollowing sanctions: (i) a censure; (ii) a $12,500 fine; and (iii) an undertaking, within 60
days of the issuance of a Decision by the Committee, to:(a) revise its WSPs to address the deficiencies identified by the Exchange;and(b) submit to William Bunting, FINRA Market Regulation, 1900 MarketStreet, Second Floor, Philadelphia, PA 19103, a signed, dated letter,
providing the following information:(1) a reference to this matter;(2) a representation that Bedrock has revised its WSPs to address
the deficiencies identified by the Exchange;(3) the date the revised WSPs were implemented; and(4) a Corrective Action Statement detailing what specific actions
Bedrock has taken to prevent future miscalculations of
Respondent’s haircut charges and accounts payable, andmismarking of its sell orders.
For more information, contact:
John C. Pickford, Enforcement Counsel, NASDAQ OMX PHLX, at +1 215 496 5273

 Copyright 2009 The NASDAQ OMX Group, Inc. All Rights Reserved.

2