NASDAQ PIILX LLCNOTICE OF ACCEPTANCE OF AWC
Certified, Return Receipt Requested
TO:

Lek Securities Corporation
Mr. Samuel F. Lek
Chief Executive Officer
1 Liberty Plaza
165 Broadway, 52" Floor
New York, NY 10006

FROM:

Nasdaq PHLX LLC ("PIILX") (the "Exchange")
do Financial Industry Regulatory Authority ("FINRA")
Department of Enforcement
9509 Key West Avenue
Rockville, MD 20850

DATE:

January 24, 2019

RE:

Notice of Acceptance of Letter of Acceptance, Waiver and Consent No. 2015045758302

Please be advised that your above-referenced Letter of Acceptance, Waiver and Consent ("AWC") has
been accepted on January 24, 2019 by the Exchange Review Council's Review Subcommittee, or by
the Office of Disciplinary Affairs on behalf of the Exchange Review Council, pursuant to PHLX Rule9216. A copy of the AWC is enclosed herewith.
You are again reminded of your obligation, if currently registered, immediately to update your Uniform
Application for Broker-Dealer Registration ("Form BD") to reflect the conclusion of this disciplinary
action. Additionally, you must also notify FINRA (or the Exchange if you are not a member of FINRA)
in writing of any change of address or other changes required to be made to your Form BD.
You will be notified by the Registration and Disclosure Department regarding sanctions if a suspension
has been imposed and by Exchange's Finance Department regarding the payment of any fine if a finehas been imposed.

Lek Securities Corporation
Page 2
If you have any questions concerning this matter, please contact me at (646) 430-7050.

Senior Counsel
Department of Enforcement, FINRA
Signed on behalf of Nasdaq PHLX LLC.
Enclosure
FINRA District 10 New York
Michael SolomonSenior Vice President and Regional Director(Via email)NASDAQ PHLX LLCLETTER OF ACCEPTANCE, WAIVER AND CONSENT
NO. 2015045758302
TO:Nasdaq PHLX LLC
do Department of Enforcement
Financial Industry Regulatory Authority ("FINRA")RE:

Lek Securities Corporation, Respondent
Broker-Dealer
CRD No. 33135

Pursuant to Rule 9216 of Nasdaq PHLX LLC ("PHLX" or the "Exchange") Code of Procedure,
Lek Securities Corporation ("LSCI" or the "Finn") submits this Letter of Acceptance, Waiverand Consent ("AWC") for the 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 bringany future actions against the Respondent alleging violations based on the same factual findings
described herein.
I.
ACCEPTANCE AND CONSENTA.

The Finn 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 anadjudication of any issue of law or fact, to the entry of the following findings by PHLX:BACKGROUNDLSCI is a Delaware corporation headquartered in New York, NY. It operates as anindependent order execution and clearing firm providing customers with direct market
access to numerous exchanges, including PHLX. LSCI has been a member of FINRA
since April 1, 1996, and a member of PHLX since November 13, 1995; theseregistrations remain in effect. The Finn has no relevant disciplinary history.
SUMMARY
1. In FINRA Matter No. 20150457583, on behalf of PHLX, FINRA's Options RegulationGroup ("Options Regulation") of the Department of Market Regulation (the "staff')
conducted a review of LSCI's compliance with applicable federal securities laws andregulations and Exchange rules regarding options order entry and related supervision
during the period between July 2013 and September 2015 (the "Review Period"),including PHLX Rules 707, 708, 760, 785(c), 1014(g)(i)(A),I 014(g)(i)(A), 1053, 1063(e)(i), and 748,
and Section 17(a) of the Securities Exchange Act of 1934, as amended (the "ExchangeAct"), and Rule 17a-3 thereunder.

STAR No. 20150457583 (EDK)2. Applicable PHLX rules require that, when accepting an order, a member must obtain andrecord an appropriate account type or origin code in each order record and as an orderdetail when entering orders into the Exchange's systems to indicate the kind of accountfor which the order will be executed and cleared. Each options market has its own origin
codes, but at a minimum, all have codes to indicate that an order is being executed for acustomer, a firm, or a market maker. Origin codes are important because, among otherthings, they affect the accuracy of the firm's order records and the Exchange's audit trail,
which may inadvertently impact the priority of order execution and the Exchange'ssurveillance for compliance with Exchange rules and federal securities laws.
3. During the Review Period, as set forth below, LSCI improperly marked certain options
orders in violation of PHLX Rules 707, 708, 760, 785(c), 1014(g)(i)(A), 1053, 1063(e)(i),and 748, and Section 17(a)(1) of the Exchange Act and Rule 17a-3 thereunder.
Specifically, LSCI submitted numerous orders, representing a total of 1,199,372
contracts, with a "Customer" order origin code instead of a "Professional Customer"1order origin code, which executed on multiple U.S. options exchanges, including theExchange, resulting in: (i) transactions executed by the Firm that may have traded aheadof other orders entitled to execution priority; (ii) potential adverse impact to the execution
price and quantity of other market participants' orders; (iii) an inaccurate audit trail andinaccurate order records; and (iv) an adverse impact to the Exchange's ability to surveil
for and detect potential violations of its rules and of federal securities laws. In addition,the Firm had supervisory deficiencies related to the marking of options orders with thecorrect origin codes.
FACTS AND VIOLATIVE CONDUCT
4. During the Review Period, the Exchange required the use of origin codes. Among otherthings, the origin code determines the order's execution priority and is part of the audit
trail data for every transaction.
5. During the Review Period, LSCI submitted an inaccurate origin code of Customer,
instead of Professional Customer, on options orders for one of its market accesscustomers, totaling approximately 1,199,372 contracts.
6. LSCI was unaware of the inaccurate origin codes entered on the Professional Customer
options contracts for this particular market access customer until so advised by anotherexchange on May 13, 2015. Despite learning of the issue, LSCI did not correct the origin
codes for its market access customer's orders that executed on PHLX until September
2015, when alerted to this issue by FINRA staff. The inaccurate origin codes for that

1 The term Professional Customer is defined on all options exchanges as a person or entity that is not a broker ordealer in securities, but places more than 390 orders in listed options per day on average during a calendar month for
its own beneficial account(s). To comply with Exchange requirements, Exchange members are required to review
their customers' activity on at least a quarterly basis to determine whether orders that are not for the account of abroker or dealer should be represented as Professional Orders. Orders for any customer that had an average of morethan 390 orders per day during any month of a calendar quarter must be represented as Professional Orders for thenext calendar quarter.

2customer were caused by a programming error in connection with certain technology
upgrades, and were ultimately resolved through corrective action by LSCI programmers.
7. Of the 1,199,372 Professional Customer options contracts executed by LSCI for its
market access customer with the origin code of Customer, approximately 396,895
contracts (33.09%) were executed on the Exchange.
8. Each instance in which LSCI executed a Professional Customer order with an incorrect
origin code of Customer created inaccuracies in the Firm's order records and the audit
trail, and could have affected the priority of order execution and the Exchange's ability tosurveil for and detect potential violations of its rules and federal securities laws.
9. By marking orders with the wrong origin code during the Review Period, LSCI violated
or caused violations of the following rules:
a. Section 17(a)(1) of the Exchange Act and SEC Rule 17a-3(a)(6)(i) thereunder,
which require Options Participants to create a memorandum of each order, andany other instruction, showing the terms and conditions of the order;
b. PHLX Rule 1053, which requires member organizations that are clearing
members of the OCC to supply certain trade information to PHLX;
c. PHLX Rule 785(c), which requires member organizations to submit certain trade
data elements, including any information that PHLX prescribes, in an automatedformat;d. PHLX Rule 708, which prohibits member organizations from engaging in acts
detrimental to the interest or welfare of PHLX;
e. PHLX Rule 760, which requires member organizations to make and keep current
records as PHLX may prescribe and as may be prescribed by the Exchange Actand rules and regulations thereunder;f. PHLX Rule 1014(g)(i)(A), which requires controlled or broker-dealer accounts toyield priority to customer orders when competing at the same price;g. PHLX Rule 1063(e)(i), which requires a Floor Broker to record options orders
onto the electronic Floor Broker Management System and include certain
information, including the order type (i.e., Customer, Firm, Broker-Dealer,Professional); andh. PHLX Rule 707, which prohibits member organizations from engaging in conductinconsistent with just and equitable principles of trade.

3Supervision
10. PHLX Rule 748(b) requires member organizations to provide for appropriate supervisory
control of the organization and compliance with securities laws and regulations, including
the Exchange's By-Laws and Rules. Member organizations are required to provide forappropriate written procedures of supervision and control, and to establish a separate
system of follow-up and review to determine that the delegated authority andresponsibility is being properly exercised.
11. PHLX Rule 748(d) requires each person with supervisory control to reasonably discharge
his duties and obligations in connection with the organization's supervision and control toprevent and detect, insofar as practicable, violations of the applicable securities laws andregulations, including the Exchange's By-Laws and Rules.
12. PHLX Rule 748(h) requires member organizations to establish, maintain, and enforce
written supervisory procedures reasonably designed to prevent and detect violations ofsecurities laws and regulations, including the Exchange's By-Laws and Rules.
13. During the Review Period, LSCI violated PHLX Rule 748 by failing to have reasonablesupervisory systems and controls in place, including a separate system of follow-up andreview, reasonably designed to achieve compliance with PHLX's origin code
requirements. In particular, LSCI failed to conduct reasonable reviews of activity incustomer accounts to determine whether and when they qualified as Professional
Customers, and to ensure that it placed correct origin codes on orders. LSCI failed to takeeffective corrective action once alerted to the issue by another options exchange to ensurethat it properly marked as Professional Customer orders for one particular market accesscustomer on several options markets, including PHLX.
B.

The Firm also consents to the imposition of the following sanctions:
1. A censure; and2. A fine in the amount of $225,000, of which $74,453 shall be paid to PHLX.2
Additionally, acceptance of this AWC is conditioned upon acceptance of similar
settlement agreements in related matters between the Firm and each of the following selfregulatory organizations: (i) NYSE American LLC; (ii) Nasdaq ISE, LLC; and (iii) theCboe Exchange, Inc.
The Firm agrees to pay the monetary sanction(s) in accordance with its PaymentInformation Form.
The Firm 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.

2

The balance of the fine shall be paid to the self-regulatory organizations referenced in the following paragraph.

4

The sanctions imposed herein shall be effective on a date set by FINRA staff.
H.
WAIVER OF PROCEDURAL RIGHTSThe Firm specifically and voluntarily waives the following rights granted under PHLX's Code ofProcedure: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, the Firm specifically and voluntarily waives any right to claim bias or prejudgment ofthe Chief Regulatory Officer, the PHLX Review Council, or any member of the PI ILX Review
Council, 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 AWC.
The Firm further specifically and voluntarily waives any right to claim that a person violated theex parte prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144, inconnection 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.

OTHER MATTERS
The Firm understands that:A.

Submission of this AWC 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; and5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. Nothingin this provision affects the Respondent's right to take legal or factual
positions in litigation or other legal proceedings in which PHLX is not aparty.

The Firm 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 AWC in this Statement. This Statement does notconstitute factual or legal findings by PHLX, nor does it reflect the views ofPHLX or its staff.

6

The undersigned, on behalf of the Firm, 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.

Date

Lek Securities Corporation
Respondent
By:
Name:
Title:

Reviewed by:Samuel P.
F. LekChief Executive Officer
Lek Securities Corporation
11 Liberty
Liberry Plaza-52nd HootFlow
New York, NY 10006(212) 509-2300

Counsel for Respondent

Accepted by PHLX:
1/24/2019
Date

Signed on behalf of theDirector of ODA, by delegated authority

0L(1)//a.c7AWz6zi67A

Elyse D. Kovar
Senior Counsel
Department of Enforcement

Signed on behalf of PHLX, by delegatedauthority from the Director of ODA

7

PAYMENT INFORMATION
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Please inform your finance or applicable department of this forthcoming debit.
If you would like to arrange for an alternative method of payment, please enter the billing
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Billing Contact Name: •IN(31,n quct. JOA
Billing Contact Address: ()Ate Waei—E. it PLAZA N itr hl) Oa@-11"1

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Billing Contact Phone Number: MA - Se)C1- 3be)
Billing Contact Email:Respectfully submitted,

Respondent
Lek Securities Co oration/yr By:1(e.rilDate
Name:
Title:STAR No. 20150457583 (EDK)Samuel F. Lek
Chief Executive Officer
Lek Securities CoiporsticonI Liberty Plaza-52nd Thor
New York, NY 10006(212) 509-2300