NASDAQ PHLX LLCNOTICE OF ACCEPTANCE OF AWC
Certified, Return Receipt Requested

TO:Cowen and Company
Steven Cohen
Managing Director, Chief Compliance Officer
599 Lexington Avenue
2l5t Floor
New York, New York 10022

FROM:

Nasdaq PHLX LLC ("Phlx")
c/o Financial Industry Regulatory Authority ("FINRA")
Department of Enforcement
Brookfield Place
200 Liberty Street
New York, New York 10281

DATE:

March 3, 2020

RE:

Notice of Acceptance of Letter of Acceptance, Waiver and Consent No. 20170540013-02

Please be advised that your above-referenced Letter of Acceptance, Waiver and Consent("AWC") has been accepted on March 3, 2020 by the Phlx Review Council's Review
Subcommittee, or by the Office of Disciplinary Affairs on behalf of the Phlx Review Council,pursuant to Phlx Rule 9216. A copy of the AWC is enclosed.

You are again reminded of your obligation, if currently registered, immediately to update yourUnifonn Application for Broker-Dealer Registration ("Fonn BD") to reflect the conclusion ofthis disciplinary action. Additionally, you must also notify FINRA (or Phlx if you are not amember of FIN RA) in writing of any change of address or other changes required to be made toyour Fonn BD.
You will be notified by the Registration and Disclosure Department regarding sanctions if asuspension has been imposed and by Nasdaq's Finance Department regarding the payment of
any fine if a fine has been imposed.
If you have any questions concerning this matter, please contact me at 646-430-7050.

Elyse D. Kovar
Senior Counsel
Department of Enforcement, FINRA
Signed on behalf of Phlx
EnclosureCowen and CompanyPage2
cc:

Ronald Chan, Risk Monitoring Director(via E-Mail)
Kristen Petherbridge, Risk Monitoring Analyst(via E-Mail)

NASDAQ PHLX LLC
LETI'ER OF ACCEPTANCE, WAIVER AND CONSENT
NO. 20170540013-02
TO:Nasdaq PHLX LLC
c/o Department of Enforcement
Financial Industry Regulatory Authority ("FINRA")RE:

Cowen and Company, Respondent
Broker-Dealer
CRDNo. 7616

Pursuant to Rule 9216 of Nasdaq PHLX LLC ("Phlx") Code of Procedure, Cowen and Company("Cowen" or the "firm") submits this Letter of Acceptance, Waiver and Consent ("A WC") forthe purpose of proposing a settlement of the alleged rule violations described below. This AWC
is submitted on the condition that, if accepted, Phlx will not bring any future actions against theRespondent alleging violations based on the same factual findings described herein.

I.
ACCEPTANCE AND CONSENT
A.

Respondent hereby accepts and consents, without admitting or denying the findings, andsolely for the purposes of this proceeding and any other proceeding brought by or on
behalf of Phlx, or to which Phlx is a party, prior to a hearing and without an adjudicationof any issue of law or fact, to the entry of the following findings by Phlx:
BACKGROUND
Cowen has been a member of Phlx since July 1, 1998, and its registration remains ineffect. Cowen is a full-service investment banking and securities brokerage firm thatprovides brokerage services to institutional customers. Cowen also provides option
execution services for clients while providing facilitation when needed. The firm isheadquartered in New York, New York and employs 586 registered individuals. Cowen
has no relevant prior disciplinary history.

SUMMARY
1. FINRA' s Department of Market Regulation, Cause Trading Examinations team,on behalf of Phlx and other options exchanges, conducted a review of the manual
options order tickets handled by Cowen during the period January 15, 2013
through September 30, 2018 (the "Order Record Review Period").
2. During the Order Record Review Period, Cowen failed to accurately record theorder transmission times of manual options orders it had routed to floor brokers atPhlx and various other national securities exchanges for execution, in violation ofRule 17a3-(a){6){i) promulgated under the Securities Exchange Act of 1934, asSTAR No. 20170540013 (EDK)amended (the "Exchange Act"), and Phlx Rule 760. Cowen also violated Phlx
Rule 748(h) because its written supervisory procedures ("WSPs") and supervisorysystem applicable to the handling of manual options orders during the period
January 15, 2013 through November 20, 2019 (the "Supervisory Review Period")were not reasonably designed to achieve compliance with the applicable
recordkeeping provisions of the federal securities laws and Phlx rules.

FACTS AND VIOLATIVE CONDUCT
3. The recordkeeping provisions of the federal securities laws and Phlx rules aredesigned to ensure that regulators have access to certain basic information about
securities transactions. Access to transaction records serves as an essential
component for effective surveillance and examination of broker-dealers by Phlx
and other self-regulatory organizations.
4. Section 17 of the Exchange Act and Rule 17a-3(a)(6)(i) promulgated thereunderrequire broker-dealers, such as Cowen, to create a brokerage order ticket of eachbrokerage order, and of any other instruction, given or received for the purchaseor sale of securities, whether executed or unexecuted. In relevant part, the rule
requires the brokerage order ticket to show, among other things, the terms andconditions of the order or instructions, the time the order was received, the time
the order was entered, and the time of execution or cancellation. Such records
must be accurate.
5. Phlx Rule 760 requires members to make, keep current and preserve such books
and records as prescribed by the Exchange Act.
6. Phlx Rule 748(h) requires member organizations to establish, maintain, andenforce WSPs, and a system for applying such procedures, reasonably designed tosupervise the types of businesses and activities in which they and their associatedpersons engage in order to achieve compliance with, and to prevent and detect,insofar as practicable, violations of applicable securities laws and regulations,
including the By-Laws and Rules of Phlx.
7. From January 15, 2013 to the first quarter of 2017, third-party systems Cowen
used to record options order information provided no means to enter a manual
order transmission time. In or about the first quarter of 2017, a designated field
was added to provide Cowen with the ability to record the time of manual ordertransmission; however, even after this field was added, Cowen still failed to enter
accurate order transmission times on manual options orders. Based on a 12-weeksampling of data over the Order Record Review Period, Cowen failed to record an
accurate order transmission time on approximately 3,193 orders transmitted toPhlx.
8. From approximately January 2019 to November 2019, Cowen began obtaining
floor brokers' records showing floor brokers' receipt, systematization, and2

execution times, but Cowen did not create its own records of order transmission tofloor brokers.
9. The conduct described in paragraphs seven and eight constitute violations of Rule17a-3(a)(6)(i) promulgated under the Exchange Act, and Phlx Rule 760.
10. During the Supervisory Review Period, Cowen failed to establish and maintain
WSPs, and a system for applying such procedures, reasonably designed to achievecompliance with the recordkeeping provisions of the federal securities laws andPhlx rules that require accurate documentation of order transmission times ofoptions orders. Although Cowen had WSPs that included daily reviews of ordertickets as well as various daily reviews of options transactions, prior to November
2016, Cowen had no reviews or WSPs to review for the accuracy of the Firm's
recorded order transmission times of options orders transmitted to third party
broker-dealers. In November 2016, Cowen implemented procedures and reviews
to monitor for accurate recording of order route and execution times for option
executions received from the floor of an exchange; however, the WSPs did notcontain any description of steps that the reviewer should take to ensure accurateorder time entry. Moreover, Cowen's reviews as conducted were ineffective anddid not detect that it failed to record accurate order transmission times throughout
the Supervisory Review Period.
11. The conduct described in paragraph ten constitutes a violation of Phlx Rule748(h).

B.

The firm also consents to the imposition of the following sanctions:••

A censure; andA fine of$100,000, of which $50,000 shall be paid to Phlx 1 ($37,500 for
the recordkeeping violations and $12,500 for related supervisory
violations)

Acceptance of this AWC is conditioned upon acceptance of a similar settlementagreement in a related matter between the firm and NYSE Arca, Inc.
Respondent agrees to pay the monetary sanction(s) upon notice that this AWC has been
accepted and that such payment(s) are due and payable. Respondent has submitted a
Payment Information form showing the method by which it proposes to pay the fine
imposed.
Respondent specifically and voluntarily waives any right to claim that it is unable to pay,
now or at any time hereafter, the monetary sanction(s) imposed in this matter.
The sanctions imposed herein shall be effective on a date set by FINRA staff.

1

The balance of the fine shall be paid to NYSE Arca, Inc.

3

II.

WAIVER OF PROCEDURAL RIGHTS
Respondent specifically and voluntarily waives the following rights granted under Phlx's Codeof Procedure:A.

To have a Formal Complaint issued specifying the allegations against the Firm;

B.

To be notified of the Formal Complaint and have the opportunity to answer theallegations in writing;C.

To defend against the allegations in a disciplinary hearing before a hearing panel,to have a written record of the hearing made and to have a written decision issued;andD.

To appeal any such decision to the Phlx Review Council and then to the U.S.
Securities and Exchange Commission and a U.S. Court of Appeals.

Further, Respondent specifically and voluntarily waives any right to claim bias or prejudgmentof the Chief Regulatory Officer, the Phlx Review Council, or any member of the Phlx ReviewCouncil, in connection with such person's or body's participation in discussions regarding theterms and conditions of this AWC, or other consideration of this AWC, including acceptance orrejection of this A WC.
Respondent further specifically and voluntarily waives any right to claim that a person violated
the ex parte prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144,
in connection with such person's or body's participation in discussions regarding the terms andconditions of this AWC, or other consideration of this AWC, including its acceptance orrejection.

III.
OTHER MATTERS
Respondent understands that:A.

Submission of this A WC is voluntary and will not resolve this matter unless anduntil it has been reviewed and accepted by FINRA's Department of Enforcement
and the Phlx Review Council, the Review Subcommittee, or the Office ofDisciplinary Affairs ("ODA"), pursuant to Phlx Rule 9216;

B.

If this AWC is not accepted, its submission will not be used as evidence to prove
any of the allegations against the Respondent; and4

C.

D.

If accepted:
1.

This AWC will become part of the Respondent's permanent disciplinary
record and may be considered in any future actions brought by Phlx or any
other regulator against the Respondent;

2.

Phlx may release this AWC or make a public announcement concerning
this agreement and the subject matter thereof in accordance with Phlx
Rule 8310 and IM-8310-3; and3.

Respondent may not take any action or make or permit to be made any
public statement, including in regulatory filings or otherwise, denying,directly or indirectly, any finding in this AWC or create the impressionthat the AWC is without factual basis. Respondent may not take any
position in any proceeding brought by or on behalf of Phlx, or to which
Phlx is a party, that is inconsistent with any part of this AWC. Nothing inthis provision affects the Respondent's right to take legal or factual
positions in litigation or other legal proceedings in which Phlx is not aparty.

Respondent may attach a Corrective Action Statement to this AWC that is astatement of demonstrable corrective steps taken to prevent future misconduct.
Respondent understands that it may not deny the charges or make any statementthat is inconsistent with the AW C in this Statement. This Statement does notconstitute factual or legal findings by Phlx, nor does it reflect the views of Phlx orits staff.

5The undersigned, on behalf of the Finn, certifies that a person duly authorized to act on its behalf
has read and understands all of the provisions of this AWC and has been given a full opportunity
to ask questions about it; that the Firm has agreed to the AWC's provisions voluntarily; and that
no offer, threat, inducement, or promise of any kind, other than the terms set forth herein and theprospect of avoiding the issuance of a Complaint, has been made to induce the Firm to submit it.

Cowen and Company

Respondent,

By:

Jj //

lr/Jll----s·-rt v{;;JJ Corl t AJI Ceo

Reviewed by:Counsel for Respondent

Accepted by Phlx:~/3/ d{}WDate

Signed on behalf of theDirector of ODA, by delegated authority

E~.Kovar, Senior Counsel
Department of Enforcement
Signed on behalf of Phlx, by delegatedauthority from the Director of ODA

6

PAYMENT INFORMATION
The fine amount will be reflected on an upcoming invoice and will be direct debited from theaccount for your firm that Nasdaq currently has on file. Please DO NOT submit payment at thistime.

Please inform your finance or applicable department of this forthcoming debit.

If you need to arrange for an alternative method of payment, please contact Nasdaq at (301) 9788310 by no later than the last business day of the month in which the Notice of Acceptance of theAWC was issued. Otherwise, a direct debit will process from the account for your firm thatNasdaq cu"ently has on file.

Respectfully submitted,Respondent

Cowenandp~
By:

STAR No. 20170540013 (EDK):;,~-----

Name:

S,tv l:-,v l otl:£ AJTitle:

CC DCOWENFebruary 4, 2020

Elyse D. KovarSenior Counsel
Department of Enforcement
FINRA
200 Liberty Street
New York, NY 10281-1003
Cowen and Company, LLC ("Cowen'')
AWC - 20170540013-01/20170540013-02

RE:

Dear Ms. Kovar,

I am writing to acknowledge receipt of both AWCs referenced above and to provide
a Statement of Corrective Action.
Cowen has implemented a process whereby its traders make a manual entry into
the Firm's order management system In conjunction with the security symbol that isbeing routed in the mnemonic FLRTREK. This entry reflects the time that Cowen'sindication of interest directed to the floor broker becomes an order (the transmissiontime).
This Statement of Corrective Action is submitted by the Respondent. It does notconstitute factual or legal findings by NYSE Arca/PHL>C, nor does it reflect the viewsof NYSE Regulatlon/PHL>C or its staff.
Please contact the undersigned with any additional questions you may have.

Sincerely,I .

/·i.oJ---f'----------

5teven Cohen

cco

Cowen and Company, U.C
599 Lexington Avenue, 2rl' Floor
New YOik, NY 10022
T 646 562 1010

www.c:owen.c:om