First New York Securities LLC was fined US $400,000 for failing to have adequate systems and controls to detect insider trading by Kenneth Allen, a former proprietary trader, while he possessed material, nonpublic information. During early 2010, Mr. Allen retained an outside consultant to provide him information on the Japanese market that First New York paid from Mr. Allen’s compensation. In September 2010, this consultant advised Mr. Allen that he learned through an employee in the sales department of Nomura Securities Co. Ltd. that Tokyo Electric Power Company would announce a secondary public offering underwritten by Nomura on September 29, 2010. This would likely result in TEPCO’s stock price falling. In response, Mr. Allen sold short TEPCO shares for First New York, which he later bought back on September 29 and October 1, 2o10, after the announcement of the offering on September 29. The trading had involved an accumulation of an 80,000-share short position, “one of the largest positions [Mr.] Allen had taken in a security while at First New York.” Although First New York’s procedures contained a policy statement that required the firm’s chief compliance officer to review, at least monthly, a sample of trading in the firm’s proprietary account, it did not describe how this review should occur, including “the identification of red flags indicative of possible insider trading.” These red flags, said FINRA, should have included “trading before a news announcement, the size of positions in certain stocks, and the amount of profits generated as a result of trading in advance of a news event.” FINRA also claimed that the firm’s review of Mr. Allen’s electronic communications was inadequate, as there were numerous suspicious communications regarding Mr. Allen’s illicit activities that never were detected. First New York previously paid a fine of JPY 14.7 million (approximately US $150,000) related to this incident for violating Japan’s insider trading laws.