SpeedTrader
Inc., an online brokerage firm, has agreed to pay a $165,000 fine and accept a
censure from the Financial Industry Regulatory Authority (FINRA) for failing to
properly supervise potentially manipulative trading and maintain adequate
market access controls.
SpeedTrader Fined $165,000
for Market Access and Supervision Failures
The
Katonah, New York-based firm, which primarily serves day traders and
institutional clients, consented to FINRA’s findings without admitting or
denying the allegations. The settlement covers violations that occurred between
November 2017 and January 2020.
FINRA found
that SpeedTrader, which provided direct market access to approximately 570
customers, including numerous China-based day traders, failed to establish a
reasonable supervisory system to detect and prevent potentially manipulative
trading practices. The firm relied on an automated third-party surveillance
system but did not tailor its parameters to SpeedTrader’s specific business
model or customer base.
“SpeedTrader
failed to establish, document, and maintain reasonable market access controls
and procedures,” FINRA commented in the official statement.
The
regulator also cited SpeedTrader for inadequate follow-up on suspicious trading
alerts and for assigning only one trader identification number per customer
account, even when multiple traders were authorized. This practice limited the
firm’s ability to identify specific individuals responsible for potentially
problematic trades.
In addition
to supervision failures, FINRA determined that SpeedTrader violated market
access rules by not maintaining direct control over customer credit thresholds.
The firm improperly relied on its clearing firms to set and monitor these
limits.
As part of
the settlement, SpeedTrader agreed to certify within 90 days that it has
remediated the issues identified by FINRA and implemented improved supervisory
systems and procedures.
This is not
the first regulatory action against SpeedTrader. In 2015, multiple exchanges
censured and fined the firm $595,000 for similar supervisory and market access
control deficiencies.
The latest
fine will be divided among FINRA and several stock exchanges, with $13,200
going to FINRA directly. SpeedTrader has submitted a payment plan and waived
its right to appeal the decision.
The SpeedTrader settlement was one of the many FINRA’s actions in recent weeks. The regulatory body has issued several other fines against financial institutions for various regulatory infractions. TradeZero America, Inc., a retail trading platform based in Brooklyn and a member of FINRA since 2016, was fined $250,000. The penalty was for multiple regulatory breaches that occurred from July 2020 to October 2022, including the misuse of social media influencers and the distribution of inaccurate privacy notices to customers.
In another case, FINRA imposed a $90,080 fine on BofA Securities for the untimely or inaccurate submission of required notifications to the regulator. Furthermore, BofA Securities was cited for its failure to uphold an adequate supervisory system to ensure compliance with regulatory deadlines. Simultaneously, RBC Capital Markets faced a penalty from FINRA, being fined $375,000 for not adhering to trade confirmation regulations. The settlement included an acknowledgment by the firm of its failure to provide accurate and timely trade confirmations to its clients
SpeedTrader
Inc., an online brokerage firm, has agreed to pay a $165,000 fine and accept a
censure from the Financial Industry Regulatory Authority (FINRA) for failing to
properly supervise potentially manipulative trading and maintain adequate
market access controls.
SpeedTrader Fined $165,000
for Market Access and Supervision Failures
The
Katonah, New York-based firm, which primarily serves day traders and
institutional clients, consented to FINRA’s findings without admitting or
denying the allegations. The settlement covers violations that occurred between
November 2017 and January 2020.
FINRA found
that SpeedTrader, which provided direct market access to approximately 570
customers, including numerous China-based day traders, failed to establish a
reasonable supervisory system to detect and prevent potentially manipulative
trading practices. The firm relied on an automated third-party surveillance
system but did not tailor its parameters to SpeedTrader’s specific business
model or customer base.
“SpeedTrader
failed to establish, document, and maintain reasonable market access controls
and procedures,” FINRA commented in the official statement.
The
regulator also cited SpeedTrader for inadequate follow-up on suspicious trading
alerts and for assigning only one trader identification number per customer
account, even when multiple traders were authorized. This practice limited the
firm’s ability to identify specific individuals responsible for potentially
problematic trades.
In addition
to supervision failures, FINRA determined that SpeedTrader violated market
access rules by not maintaining direct control over customer credit thresholds.
The firm improperly relied on its clearing firms to set and monitor these
limits.
As part of
the settlement, SpeedTrader agreed to certify within 90 days that it has
remediated the issues identified by FINRA and implemented improved supervisory
systems and procedures.
This is not
the first regulatory action against SpeedTrader. In 2015, multiple exchanges
censured and fined the firm $595,000 for similar supervisory and market access
control deficiencies.
The latest
fine will be divided among FINRA and several stock exchanges, with $13,200
going to FINRA directly. SpeedTrader has submitted a payment plan and waived
its right to appeal the decision.
The SpeedTrader settlement was one of the many FINRA’s actions in recent weeks. The regulatory body has issued several other fines against financial institutions for various regulatory infractions. TradeZero America, Inc., a retail trading platform based in Brooklyn and a member of FINRA since 2016, was fined $250,000. The penalty was for multiple regulatory breaches that occurred from July 2020 to October 2022, including the misuse of social media influencers and the distribution of inaccurate privacy notices to customers.
In another case, FINRA imposed a $90,080 fine on BofA Securities for the untimely or inaccurate submission of required notifications to the regulator. Furthermore, BofA Securities was cited for its failure to uphold an adequate supervisory system to ensure compliance with regulatory deadlines. Simultaneously, RBC Capital Markets faced a penalty from FINRA, being fined $375,000 for not adhering to trade confirmation regulations. The settlement included an acknowledgment by the firm of its failure to provide accurate and timely trade confirmations to its clients
This post is originally published on FINANCEMAGNATES.
