Notice of Disciplinary Action Against D&D Securities, Inc., aMember Organization
To:Members, Member Organizations, Participants and Participant Organizations

From:John C. Pickford, Enforcement Counsel, NASDAQ OMX PHLXSMDATE:April 9, 2015

FINRA Matter Nos. 20120347545 et al.
Enforcement No. 2015-01
On April 9, 2015, the Business Conduct Committee (the “Committee”) issued a disciplinary
decision against D&D Securities, Inc. (“D&D” or the “Firm”), a member organization of theNASDAQ OMX PHLX LLC (“PHLX” or the “Exchange”). In response to a Statement ofCharges issued in this action, D&D submitted an Offer of Settlement, Stipulation of Facts
and Consent to Sanctions (“Offer”). Solely to settle this proceeding, and without admitting
or denying the charges, D&D consented to findings that during the period between October
1, 2012 and December 31, 2013 (the “Review Period”), D&D had committed violations ofSection 15(a)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and Exchange Rules 119, 120, 611, 707, 748(h), 1014, 1051(a), 1067, and 1084.
Specifically, D&D consented to findings that during the Review Period, it had: (i) executed
11 options transactions that traded through the Exchange’s Best Bid and Offer (“PBBO”)
and/or the National Best Bid and Offer (“NBBO”) markets and/or ahead of Streaming Quote
Trader and/or Remote Stream Quote Trader quotations with established priority; (ii) failed
to report 10% or more of its executed options transactions to the consolidated tape within
90 seconds of execution for 11 different months; (iii) authorized and paid transaction-based
compensation to an entity that was not a registered broker-dealer, and had thereby caused
the entity to operate as an unregistered broker-dealer; (iv) permitted one or more of its
officers to function as Principals without properly registering and qualifying them asPrincipals, or otherwise obtaining a waiver of such registration or qualification from theExchange, and failed to register and qualify the minimum number of individuals required tobe registered as Principals of the Firm; and (v) maintained written supervisory procedures(“WSPs”) that were deficient, in that: (a) its WSPs failed to address compliance with, andD&D failed to supervise its trading activities to detect and prevent violations of, Exchange
rules regarding the timely reporting of executed options trades to the consolidated tape; (b)its WSPs failed to address the payment of transaction-based compensation to unregisteredbroker-dealers; and (c) D&D failed to enforce and supervise compliance with the provisionsof its WSPs that required the proper registration and qualification of Principals.
The Offer submitted by D&D was accepted by the Committee and was the basis of its
Decision. The Committee found that D&D had violated Section 15(a)(1) of the Exchange Actand Exchange Rules 119, 120, 611, 707, 748(h), 1014, 1051(a), 1067, and 1084, andimposed the following sanctions: (i) a censure; (ii) a fine in the amount of $20,000; and (iii)an undertaking by D&D, within 30 days of the issuance of a Decision by the Committee, to:(a) correct the supervisory deficiencies identified in the Decision; (b) revise its WSPs toaddress such deficiencies; and (c) provide a signed, dated letter to FINRA’s Market
Regulation staff detailing the actions taken to remediate the supervisory deficiency, as wellas its detailed action plan to register and qualify the minimum number of Principals by nolater than September 1, 2015, and enclosing a copy of the relevant excerpts of the revisedWSPs.
For more information, contact:•John C. Pickford, Assistant General Counsel, NASDAQ OMX PHLX, at +1 215 496 5273

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

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