SEC Censures OTC Link Over Regulation SCI Compliance Failures

The U.S. Securities and Exchange Commission censured broker-dealer OTC Link LLC and ordered it to pay a $575,000 civil penalty for repeated Regulation Systems Compliance and Integrity (SCI) failures connected to the OTC Link ATS. The SEC announced the settled action on September 22.

According to the SEC order, OTC Link failed between August 2016 and March 2025 to establish, maintain and enforce some written policies and procedures required for its alternative trading system. The deficiencies covered system security, access control, application-vulnerability management, testing and remediation.

The SEC said Division of Examinations staff had identified certain missing or draft-only policies in several examinations, but that the firm did not promptly correct the problems. The agency found that the failures affected requirements intended to support adequate capacity, integrity, resiliency, availability and security for SCI systems. Without admitting the findings, OTC Link agreed to a cease-and-desist order, censure and penalty.

Why it matters

OTC market infrastructure is part of the route through which investors and brokers access a broad range of securities. Regulation SCI focuses on whether critical systems can operate reliably and securely. The enforcement action is a reminder that technology-control weaknesses can become a regulatory and market-integrity issue even when the immediate trading experience appears normal.

What to watch next

Traders and firms should watch for any operational or compliance disclosures from OTC Link and for further SEC actions involving SCI entities. Brokers that rely on alternative trading systems should also monitor outage, security and execution-related communications from their venues.