Clearly Erroneous Transactions Adjudication Procedures
If a member firm executes a transaction that results from an obvious clerical or system glitch at a price substantially away from the National Best Bid and Offer (NBBO), the firm may petition FINRA to declare the trade:
Under FINRA Rule 11892 (Clearly Erroneous Transactions), a member firm can request that FINRA review a trade with an obvious pricing/execution error. FINRA officers have the authority to declare the trade null and void or adjust its terms.
Complete Analysis & Legal Rationale
The request must be submitted within 30 minutes of the execution.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Clearly erroneous procedures permit FINRA to void or adjust obvious clerical glitches.
Execution glitches do not cause statutory defaults of the firm.
Wash sales involve repurchasing stock within 30 days to claim a tax loss, not execution errors.
Irrelevant category.
Official Standard: Outlines procedures for reviewing and nullifying erroneous trade executions.