FINRA has
imposed a $30,000 fine on tastytrade, a Chicago-based retail trading platform
and the US subsidiary of publicly listed broker IG Group (LSE: IGG), for failing to
properly supervise its employees’ outside securities accounts over a two-year
period.
Tastytrade Agrees to
$30,000 Fine in FINRA Supervision Case
According
to FINRA, tastytrade allegedly
failed to maintain adequate supervision of approximately 84 outside securities
accounts belonging to 35 employees between July 2021 and June 2023.
“From July
2021 through July 2023, tastytrade failed to establish, maintain, and enforce a
supervisory system, including written supervisory procedures (WSPs), reasonably
designed to supervise the outside securities accounts disclosed to the firm by
its associated persons,” FINRA
commented.
The
investigation revealed significant delays in reviewing employee trading
activities, with 25 employees’ brokerage accounts from the fourth quarter of
2021 going unchecked. The situation deteriorated further in early 2022, with
nearly all employee outside account reviews falling behind schedule.
Most
notably, 14 accounts remained completely unreviewed until June 2023, when FINRA
conducted a cycle examination of the firm. The regulatory body found that
tastytrade’s written supervisory procedures lacked specific guidelines for
documenting and tracking these mandatory reviews.
tastytrade
is a part
of IG Group, the publicly listed retail broker from the UK. However, news
of the fine imposed on the subsidiary did not affect IGG’s stock price, which
today (Thursday) is up 0.4%, testing the 951 pence level.
According
to the company’s latest report for the three-month period ending August 31, tastytrade
generated total revenue of nearly $71 million, accounting for one-quarter
of IG’s total revenue for the period, which amounted to $279 million.
Regulatory Response
While
accepting FINRA’s findings without admitting or denying them, tastytrade agreed
to pay the monetary sanction and receive a censure. The firm, which has been a
FINRA member since 2016, maintains 73 registered representatives at its Chicago
headquarters.
“In July
2023, tastytrade updated its WSPs and made enhancements to its system for
supervision of employees’ outside security accounts,” FINRA added.
The
settlement highlights FINRA’s continued focus on member firms’ supervision of
employee trading activities, particularly in the growing retail trading
platform sector. tastytrade is another popular retail trading brand sanctioned
by FINRA in last month, after the regulastory body issued a censure order and
penalty of $475,000 on Interactive Brokers (Nasdaq: IBKR) for lapses in its
share lending program.
Earlier in
June, TradeZero America, another trading platform for retail investors, has
been fined $250,000, after facing allegations of multiple regulatory violations
between July 2020 and October 2022
FINRA has
imposed a $30,000 fine on tastytrade, a Chicago-based retail trading platform
and the US subsidiary of publicly listed broker IG Group (LSE: IGG), for failing to
properly supervise its employees’ outside securities accounts over a two-year
period.
Tastytrade Agrees to
$30,000 Fine in FINRA Supervision Case
According
to FINRA, tastytrade allegedly
failed to maintain adequate supervision of approximately 84 outside securities
accounts belonging to 35 employees between July 2021 and June 2023.
“From July
2021 through July 2023, tastytrade failed to establish, maintain, and enforce a
supervisory system, including written supervisory procedures (WSPs), reasonably
designed to supervise the outside securities accounts disclosed to the firm by
its associated persons,” FINRA
commented.
The
investigation revealed significant delays in reviewing employee trading
activities, with 25 employees’ brokerage accounts from the fourth quarter of
2021 going unchecked. The situation deteriorated further in early 2022, with
nearly all employee outside account reviews falling behind schedule.
Most
notably, 14 accounts remained completely unreviewed until June 2023, when FINRA
conducted a cycle examination of the firm. The regulatory body found that
tastytrade’s written supervisory procedures lacked specific guidelines for
documenting and tracking these mandatory reviews.
tastytrade
is a part
of IG Group, the publicly listed retail broker from the UK. However, news
of the fine imposed on the subsidiary did not affect IGG’s stock price, which
today (Thursday) is up 0.4%, testing the 951 pence level.
According
to the company’s latest report for the three-month period ending August 31, tastytrade
generated total revenue of nearly $71 million, accounting for one-quarter
of IG’s total revenue for the period, which amounted to $279 million.
Regulatory Response
While
accepting FINRA’s findings without admitting or denying them, tastytrade agreed
to pay the monetary sanction and receive a censure. The firm, which has been a
FINRA member since 2016, maintains 73 registered representatives at its Chicago
headquarters.
“In July
2023, tastytrade updated its WSPs and made enhancements to its system for
supervision of employees’ outside security accounts,” FINRA added.
The
settlement highlights FINRA’s continued focus on member firms’ supervision of
employee trading activities, particularly in the growing retail trading
platform sector. tastytrade is another popular retail trading brand sanctioned
by FINRA in last month, after the regulastory body issued a censure order and
penalty of $475,000 on Interactive Brokers (Nasdaq: IBKR) for lapses in its
share lending program.
Earlier in
June, TradeZero America, another trading platform for retail investors, has
been fined $250,000, after facing allegations of multiple regulatory violations
between July 2020 and October 2022
This post is originally published on FINANCEMAGNATES.
