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UPDATE 1-Oz Management to pay $4.25 mln to settle with U.S. SEC over data errors
July 14, 2015 / 3:09 PM / 2 years ago

UPDATE 1-Oz Management to pay $4.25 mln to settle with U.S. SEC over data errors

(Adds background from the case, comment from Och-Ziff spokesman)

By Sarah N. Lynch

WASHINGTON, July 14 (Reuters) - Oz Management LP, an adviser for numerous Och-Ziff funds, has agreed to admit to wrongdoing and pay a $4.25 million penalty to settle civil charges that it provided inaccurate trade data to four prime brokers, U.S. regulators said on Tuesday.

The Securities and Exchange Commission said the firm’s errors caused inaccuracies not only in the brokers’ books, but also in various records and data provided to the SEC in investigations.

“This reporting issue has been resolved and we have taken steps to ensure that it does not re-occur,” an Och-Ziff spokesman said.

The SEC said that for nearly six years through December 2013, Oz misidentified trades provided in data to four prime brokers. That in turn led the four brokerages to inaccurately list 552 million shares in their books and records.

These errors also led the brokers to inaccurately report 14.4 million shares to the SEC through the regulator’s so-called “blue sheet” requests, or requests for market data to assist with investigations into manipulation or insider-trading, the SEC said.

It said the Financial Industry Regulatory Authority (FINRA), Wall Street’s self-funded regulator, even made several investigative referrals to the SEC based on the erroneous data.

“The SEC relies on the accuracy of the books and records of financial institutions and blue sheet data,” said Andrew Ceresney, the head of the SEC’s enforcement division.

“OZ Management’s inaccurate data had a substantial ripple effect that the SEC staff discovered through diligent investigative work,” he added.

This marks the second case in the recent past involving blue sheet reporting errors. In 2014, the SEC charged Scottrade over data errors in blue sheet requests.

In addition to the blue sheet violations, the SEC said, Oz Management also settled other charges stemming from violations surrounding the purchase of stock in a secondary offering during a restricted period in 2011. (Reporting by Sarah N. Lynch; Additional reporting by Ross Kerber in Boston; Editing by Will Dunham and Mohammad Zargham)

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