NYSE AMERICAN LLC LETTER OF ACCEPTANCE, WAIVER, AND CONSENT NO

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1 NYSE AMERICAN LLC LETTER OF ACCEPTANCE, WAIVER, AND CONSENT NO TO: RE: NYSE AMERICAN LLC Israel A. Englander & Co., LLC, Respondent CRD No Israel A. Englander & Co., LLC violated: (1) NYSE American Rule 416(a)(6) and NYSE American Rule 16 by failing to observe high standards of commercial honor and just and equitable principles of trade when it failed to exercise due diligence in 'execution of customer orders, resulting in an inferior price to the customers in violittion of its best execution obligations; (2) NYSE American Rule 8210 and NYSE Ameiican Rule 476(a)(11) when it failed to produce all responsive information to NYSE Regulati n requests for information; and (3) NYSE American Rule 320 by failing to establish nd maintain an adequate supervisory system and by failing to conduct adequate supe ision of its Chief Compliance Officer, Emily Garber, to ensure the Firm met its obligati!ons to provide complete and consistent information in response to regulatory inquiries. Consent to a censure and a S30,000 fine. Pursuant to Rule 9216 of the NYSE American LLC ("NYSE American" or the "Exchange" )1 Code of Procedure, Israel A. Englander & Co., LLC (-Englander" or the "Firm") submits this Letter of Acceptance, Waiver, and 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, NYSE American will not bring any future actions attainst the Fi n alleging violations based on the same factual findings described herein. I. ACCEPTANCE AND CONSENT A. Englander hereby accepts and consents, without admitting or denying the findings, and solely for the purposes of this proceeding and any other proceeding brought by or on behalf of NYSE American, or to which NYSE American is a party prior to a hearing and without an adjudication of any issue of law or fact, to the entry of the following findings by NYSE American: BACKGROUND AND JURISDICTION 1. Englander is a Delaware Corporation with its principal offices in New York, New * 1 At the time of the violation, the Exchange was known as NYSE MKT LI.C." and the NYSE American rules referenced herein were denominated NYSE MKT rules.

2 York. Englander is registered with the Securities and Exchange Commission as a broker-dealer, is a member of NYSE American, and became alai Amex Trading Permit Holder on February 2, PROCEDURAL HISTORY 2. Thi& matter arises from a referral to NYSE. Regulation by the Market Regulation Department of the Financial Industry Regulatory Authority, Ind. ("FINRA"). VIOLATIONS 3. On November 12, 2015 (the "Trade Date"), Englander violated NYSE American Rule 476(a)(6) and NYSE American Rule 16 by failing to adhere to principles of good business practice in the conduct of its business affairs, by failing to observe high standards of commercial honor and just and equitable principlei of trade, when it disregarded two separate offers for price improvement on its c tourers' orders, resulting in an inferior price to its customers, in violation of th Firm's best execution obligations. 4. During the period of November 12, 2015 through September 6, 2017 (the "Review Period"), Englander violated NYSE American Rule 8210 and YSE American Rule 476(a)(11) when it failed to provide complete and consistent in ormation in response to FINRA and NYSE Regulation requests for information. 5. During the Review Period, Englander violated NYSE American Rule 320 when it failed to establish and maintain an adequate supervisory system and failed to conduct adequate supervision of its Chief Compliance Officer, Emily Garber, to ensure that the Firm met its obligations to provide complete and consistent information in response to regulatory inquiries. Violations Concerning the November Trade 6. At all relevant times, NYSE American Rule 16 required that "[e]very member and metnber organization shall at all times adhere to the principles of good business practice in the conduct of its business affairs." NYSE American Rule 476(a)(6) authorized the imposition of fine, censure, and other penalties for "failing to observe high standards of commercial honor and just and equitable prii ciples of trade." 7. On or about 9:30 am on the Trade Date, an Englander Clerk ("Clerk") received an electronic message from a Firm customer seeking an offer on Reversal/Conversions for a certain option series ("XYZ"). tied.t.o stock. Around the same time, another Englander Clerk ("Clerk 2") communicated with a Firm customer who was seeking an offer on 1,000 Reversal/Conversions for XYZ, tied to.stock (collectively the "XYZ Trade"). 8. Clerk I sent electronic communications to other potential custo ters, in order to solicit offers for the XYZ Trade. including Firm B. In respons to the solicitation, at approximately 9:39 am, Firm B instant messaged Clerk 1 with n offer of $0.25 for

3 1,500 contracts of the XYZ Trade. 9. Prior to the XYZ Trade's execution, Clerk I sent an Englander Floor Broker ("Floor Broker") to the trading crowd with the XYZ Trade, seeking to cross it at $0.30. A NYSE American floor broker from another firm ("Amex Firm's) offered to do 1,300 contracts of the XYZ Trade at $ At approximately 9:46 am on the Trade Date, Englander execu ed the XYZ Trade as a qualified Contingent Cross ("QCC") at a price or $0.30, with ut including Firm B or Amex Firm in the execution. The options print of $0.30 wasl$0.05 worse than the offers Englander had received from both Firm W and Amex FiAn throughout the course of handling its customers' orders. II. Thoughout the course of handling the XYZ Trade, Englander lhould have known abut the better prices available to its customers, and its failure to take this price improvement into account resulted in an inferior price to its cu omers. Based on the foregoing, Englander failed to adhere to the principles of good usiness practice in the:conduct of its business affairs, in violation of NYSE Ameri an Rule 16, and failed to observe high standards of commercial honor and the just an equitable principles of trade, in violation of NYSE American Rule 476(a)(6). Violations Concerning the Failure to Provide Complete and Consistent Information in Response to Regulatory Inquiry 12. At all relevant times, NYSE American Rule 8210(c) and NYS13 American Rule 476(a)(11) required member organizations to provide complete and consistent information requested by Exchange staff during the course or al investigation. 13. NYSE Regulation relies on its members to provide complete and consistent information in response to regulatory inquiries. A failure to do so impedes NYSE Regulation's ability to conduct investigations and causes delay in matter resolution. r 14. During the Review Period, the Firm failed to provide complete and consistent information and documents to FINRA and NYSE Regulation. 15. In its written response to a FINRA request for information, Fir Chief Compliance Officer ("CCO"), Emily Garber, provided a narrative descripti n of the XYZ trade that was inconsistent with Firm employee accounts provided to FINRA on the Trade Date. 16. Additionally, Ms. Garber's response failed to include several electronic communications regarding the XYZ Trade which were respons Ye to FINRA requests and contained relevant evidence regarding the XYZ Trade (the LWithheld Communications"). 17. NYSE Regulation only became aware of the Withheld Communications as a result of subsequent requests for electronic communications, which reveled the existence of theiwithheld Communications. 3

4 18. One of the Withheld Communications demonstrated that an instant message conversation between Clerk 1 and its customer, which was orionally provided to FINRA in response to its initial request for information, had b4n excerpted, and was not provided in its entirety (the "Excerpted TM"). The dialogud which had been removed from the Excerpted 1M included relevant information regarding the timing and execution of the XYZ Trade. 19. Based on the foregoing. Englander violated NYSE American Rule 8210 and NYSE American Rule 476(a)(11). Violations Concerning the Failure to Supervise the CCO and to Maintain an Adequate Supervisory System to Ensure Compliance with NYSE American Rule 8210 and NYSE American Rule 476(a)(11) 20. At all relevant times, NYSE American Rule 320 set forth certa requirements regarding offices. supervision, and control of NYSE American members and member organizations. NYSE American Rule 320(e) required that men bers "establish, maintain, enforce and keep current a system of compliance and supervisory controls, reasonably designed to achieve compliance with applicable securities laws and regulations and Exchange rules." 21. During the Review Period. the Firm failed to maintain a system of oversight and supervision in order to ensure that CCO, Ms. Garber, carried Ott the Firm's responsibilities under NYSE American Rule 8210 and NYSE irnerican Rule 476(a)(11). 22. As described infra, Ms. Garber has a history with FINRA and OBOE regarding her failure to fully comply with regulatory inquires. Additionally. he Firm was. previously cited for its failure to supervise Ms. Garber in conn etion with these duties in a settlement with CBOE. 23. Despite the Firm's knowledge of Ms. Garber's disciplinary history and its own supervisory disciplinary history, it failed to adequately supervile Ms. Garber in her capacity as CCO and failed to implement a supervisory system reasonably designed to ensure the Firm's compliance with NYSE American Rule and NYSE American Rule 476(a)(l 1). 24. Based on the foregoing, Englander violated NYSE American Rule 320. RELEVANT PRIOR DISCIPLINARY HISTORY 25. The Firm and Ms. Garber, jointly and severally, entered into an Offer of Settlement with the Chicago Board Options Exchange, Inc. ("CBOE"), on August 28, 2012 in the amount of $50,000 (File No ). In addition to underlying violations regarding systematization of orders, The Offer of Settlement included a violation for Garber's impediment and delay in CBOE's investigation due to Ms. Garber's failure to respond in a timely manner to CBOE's requests during the investigation. The settlement also included a supervisory charge for the Firm, for its failure to supervise 4

5 Ms, Garber. OTHER FACTORS 1. During the course of FINRA's 2015 Cycle Trading Examination of Englander, FINRA Staff encountered issues with Ms. Garber and her responsiveness to requests for information. In its examination report. FINRA noted as an bxception the Firm's lack of regulatory cooperation via its failure to provide timely Eind accurate information in response to requests for information. In March of 2017, FINRA Examinations held a compliance conference with the Firm regarding the Firm's failure to adequately comply with FINRAls requests for information during the course of the 2015 Cycle Trading Exam nation. In connection with that conference, FINRA required Englander to submit a Compliance Accountability Plan in order to address and remediate the responsiveness issues which arose in the 2015 Cycle Trading Examination. The Firm, has implemented its Compliance Accountability Plan. SANCTIONS B. The Firm also consents to the imposition of the following sanctions: I. Censure and fine in the amount of 530,000 The Firm agrees to pay the monetary sanction(s) upon notice that tl is AWC has been accepted and that such payment(s) are due and payable. The Firm as submitted a Method of Payment Confirmation form showing the method by wh5ch it will pay the fine imposed. The Firtn specifically and voluntarily waives any right to claim tha it is unable to pay, now orlat any time hereafter, the monetary sanction(s) imposed in this matter. The Firm agrees that it shall not seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to pays ent made pursuant to any insurance policy, with regard to any fine amounts that the Fir pays pursuant to this AWC, regardless of the use of the fine amounts. The Firm further grees that it shall not claim, assert, or apply for a tax deduction or tax credit with regard io any federal, state, or local tax for any fine amounts that the Firm pays pursuant to this AWC, regardless of the use of the fine amounts. The sanctions imposed herein shall be effective on a date set by NYSE Regulation staff. II. WAIVER OF PROCEDURAL RIGHTS The Firm specifically and voluntarily waives the following rights granted under the NYSE American Code of Procedure: 5

6 A. B. C. To have a Formal Complaint issued specifying the allegatio s against the Firm; To be notified of the Formal Complaint and have the oppo unity to answer the allegations in writing; To defend against the allegations in a disciplinary hearing fore a hearing panel, to have a written record of the hearing made and to have a ri tten decision issued; and Z. To appeal any such decision to the Exchange's Board of Directors and then to the U.S. Securities and Exchange Commission and a U.S. Cour of Appeals. Further, the Firm specifically and voluntarily waives any right to claim bi or prejudgment of the Chief Regti latory Officer of NYSE American; the Exchange's Board or Directors, Disciplinary Action Committee ("DAC"), and Committee for Review ("C R"); any Director, DAC member, or CFR member; Counsel to the Exchange Board of Direct rs or CFR; any other NYSE American employee; or any Regulatory Staff as defined in Rule 91:10 in connection with such person's or body's participation in discussions regarding the terms anld conditions of this AWC, or other consideration of this AWC, including acceptance or rejecti n of this AWC. The Firm further specifically and voluntarily waives any right to claim tha a person violated the ex parte communication prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144, in connection with such person's or body's participation in dis ussions regarding the terms and conditions of this AWC, or other consideration or this AWC, in hiding its acceptance or rejection. III. OTHER IVATTERS The Firm understands that: A. Submission of this AWC is voluntary and will not resolve t is matter unless and until it has been reviewed by NYSE Regulation, and accept d by the Chief Regulatory Officer of NYSE American pursuant to NYSE American Rule 9216; B. C. If this AWC is not accepted. its submission will not be used as evidence to prove any of the allegations against the Firm; and If accepted: The AWC shall be sent to each Director and each member of the Committee for Review via courier, express delivery or electronic means, and shall be deemed final and shall constitute the complaint, answer, and decision in the -matter, 25 days after it is sent to each Director and each member of the Committee for Review, unless review by the Exchange Board of Directors is requested pursuant to NYSE American Rule 9310(a)(1)(B); 2. This AWC will become part of the Firm's permanent difiplinary record and may be considered in any future actions brought by the -3xchange, or any 6

7 other regulator against the Firm; 3. NYSE American shall publish a copy of the AWC on its website in accordance with NYSE American Rule 8313: 4. NYSE American may make a public announcement concerning this agreement and the subject matter thereof in accordance With NYSE American Rule 8313: and 5. The Firm 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 iinprelsion that the AWC is without factual basis. The Firm may not take any position in any proceeding brought by or on behalf of the Exchange, or to which th6 Exchange is a party, that is inconsistent with any part of this AWC. Nothing in this provision affects the Firm's (i) testimonial obligations; or (ii) righ to take legal or factual positions in litigation or other legal proceedings lin which the Exchange is not a party. D. I A signed copy of this AWC and the accompanying Method of Payment Confirmation form delivered by , facsimile or other means ofelectronic!transmission shall be deemed to have the same legal effect as delivery of an original signed copy. E.!The Firm may attach a Corrective Action Statement to this AWC that is a 'statement of demonstrable corrective steps taken to prevent future misconduct. 1The Firm understands that it may not deny the charges or i ake any statement that iis I inconsistent with the AWC in this Statement. Any such tatement does not.!constitute factual or legal findings by the Exchange, nor dos it reflect the views of NYSE Regulation or its staff. The Firm certifies that, in connection with each of the Exchange's request for documents in connection with this matter, the Firm made a diligent inquiry of all persons who reasonably had possession of responsive documents, and that those documents have been produced or identified in a privilege log. The Firm acknowledges that, in agreeing to the AWC, the Exchange has relied upon, arnong other things, the completeness of such document production. 7

8 The undersigned, on behalf of the Firm, certifies that a person duly authoried 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 it has agreed to the AWC's provisions volun(arily; and that no offer, threat, inducement, or promise of any kind, other than the terms set forth herein and the prospect of avoiding the issuance of a Complaint, has been made to induce the firm to submit it. IOU 74)(? Date Israel A. Englander & Co., LLC, Respondent Stephen Tobias President Accepted by NYSE Regulation it/ 011 Date Laura J. Sea n Enforcement Counsel! NYSE Regulation Signed on behalf of NYSE American LLC. by delegated authority from its Chief Regulatory Officer 8