Notice of Disciplinary Action against PTR, Inc., a Member
Organization
To:Members, Member Organizations, Participants and Participant Organizations

From:John C. Pickford, Assistant General Counsel, NASDAQ PHLXSM

DATE:

September 27, 2016

Enforcement No. 2016-13
FINRA Matter No. 20140397242
On September 23, 2016, the Business Conduct Committee (the “Committee”) issued adisciplinary decision against PTR, Inc. (“PTR” or the “Firm”), a member organization of theNASDAQ PHLX LLC (“PHLX” or the “Exchange”). In response to a Statement of Charges
issued in this action, PTR submitted an Offer of Settlement, Stipulation of Facts and Consentto Sanctions (“Offer”). Solely to settle these proceedings, and without admitting or denying
the charges, PTR consented to findings that during the period between September 1, 2014
and September 30, 2014 (the “Review Period”), PTR had committed violations of Section 17of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rules 17a-3,
17a-3(a)(19)(ii), and 17a-5 promulgated thereunder, and Exchange Rules 600, 616, 703,707, 748(h), 757, 760, 1024 and 1025.
Specifically, PTR consented to findings that during the Review Period, it had failed to: (i)maintain books and records that accurately reflected its accounts payable, accrued
expenses, non-allowable assets, and net capital computations, and filed a FOCUS reportcontaining such inaccuracies with the Exchange; (ii) timely amend the Form U-4 filing of anemployee to reflect her dual affiliation status with Respondent and an affiliated firm; (iii)
maintain accurate records of its compensation agreements with certain of its associatedpersons; (iv) secure, or could not provide evidence that it had timely obtained, written
customer agreements from nine non-broker-dealer customers to manage their options
accounts in accordance with applicable securities laws, including the rules of the Exchange;and (v) retain, or could not provide evidence that it had retained, copies of the customer
options agreements of several of its customers.
PTR also consented to findings that it had failed to implement, or otherwise adhere to, its
AML compliance procedures requiring: (a) its employees to complete and return a form
acknowledging that they had received, read and understood Respondent’s AML compliancepolicies and procedures; and (ii) the Firm to check the names of newly-hired employees
against a list of individuals, groups and entities maintained by the Office of Foreign Assets
Control (“OFAC”) in the U.S. Department of the Treasury to ensure that the Firm does nottransact business with terrorists, narcotics traffickers and other prohibited persons.
Additionally, PTR consented to findings that it had failed to reasonably supervise andimplement adequate controls, including a separate system of follow-up and review,
reasonably designed to oversee and review: (i) the activities of its Financial and Operations

Principal (“FinOp”), including his preparation and filing of periodic reports with the Exchange
and the Securities and Exchange Commission; and (ii) the activities of Respondent’s
personnel charged with: (a) updating the registration status of its associated persons; (b)reviewing the personal brokerage account statements of Respondent’s employees; and (c)approving non-broker-dealer customer accounts.
Finally, the Firm consented to findings that it had failed to implement and otherwise adhere
to its written supervisory procedures that governed: (i) the maintenance of records relating
to its business with customers; and (ii) the dating of sample brokerage account statements
evidencing its monthly review of such statements.
The Offer submitted by PTR was accepted by the Committee and was the basis of its
Decision. The Committee found that PTR had violated Section 17 of the Exchange Act, Rules
17a-3, 17a-3(a)(19)(ii), and 17a-5 promulgated thereunder, and Exchange Rules 600, 616,703, 707, 748(h), 757, 760, 1024, and 1025, and imposed the following sanctions: (i) acensure; (ii) a fine in the amount of $50,000; and (iii) an undertaking by PTR, within 60
days of the issuance of a Decision by the Committee, to correct the supervisory and otherdeficiencies identified during the staff’s examination of the Firm, and revise its WSPs toaddress such deficiencies. In arriving at these sanctions, consideration was given to thefact that the Firm, within the past several months, had restructured its regulatorycompliance program, including through the replacement of all key, long-term complianceand financial reporting personnel.
For more information, contact:
John C. Pickford, Assistant General Counsel, NASDAQ PHLX, at +1 215 496 5273.

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