TD Securities’ Cowen Unit Fined $80,000 by FINRA Over Tender Offer Violation | LeapRate
FINRA has censured and fined Cowen and Company $80,000 for violating securities rules related to a 2022 partial tender offer, according to a Letter of Acceptance, Waiver, and Consent (AWC) released by the regulator. Cowen, once an independent broker-dealer, was merged into TD Securities (USA) LLC in December 2024 and subsequently withdrew its FINRA registration in February 2025.
According to the AWC, Cowen violated Rule 14e-4 of the Securities Exchange Act of 1934 by over-tendering 100,000 shares during a modified Dutch auction-style partial tender offer for an unnamed company in 2022. The firm, acting alongside an affiliate, tendered 150,000 shares without properly calculating its net long position. Regulators found that Cowen failed to account for 1,000 short call options held in its proprietary account, which represented 100,000 underlying shares with an exercise price below the highest tender price offered.
FINRA also determined that Cowen’s supervisory framework, including its written supervisory procedures, was inadequate between October 2022 and May 2024. The firm’s procedures did not clearly address how to calculate short call options with exercise prices falling between the final tender price and the highest offer price in Dutch auction tender offers. Cowen has since updated its procedures to address the gap.
Under the settlement, Cowen agreed to the censure and fine without admitting or denying FINRA’s findings, with $40,000 of the penalty going to FINRA and the remainder allocated to NYSE Arca. At the time of its merger, Cowen had 274 registered representatives and 12 branch offices, while TD Securities now operates with roughly 1,600 registered representatives across 22 branches.
