Earlier quoted context omitted.
If I ask my broker to buy some stock, I want it at the lowest price. My broker, left to his own devices, may prefer to buy at a higher price because it is more profitable for him . This rule seems designed to protect the consumer when the consumer and the stock brokers goals are not aligned.
The article says they only do proprietary trading, which I thought means they only use their own money. I guess that's rare enough that the rules apply regardless in order to simplify things?
If they weren't a BD, their BD (which is required to ultimately reach the markets) would be on the hook for letting this happen. ISOs are something that get a lot of compliance/regulatory scrutiny and most BDs don't let their customers use them. If they are allowed, there's a lot of reporting/transparency/surveillance to ensure they are issued properly. And as you can see from this fine, there are a lot of rules and corner cases one must cover and apparently even the best firms mess it up one way or another.
Latour's previous fine (read Matt Levine's continually excellent articles about this stuff) was for "Net Capital Requirements" which are designed to keep customer money safe, particularly in the presence of other customers who might blow up ... of course Latour has no customers, but it is still the rules. [Although IMO this one was a grey area where Latour probably had better models than what the rules required, but since they didn't match the rules properly they got fined.]