FINRA has reached a settlement with Interactive Brokers, a
member since 1995, over allegations of rule violations related to free-riding
in customer cash accounts. The firm accepted a Letter of Acceptance, Waiver,
and Consent (AWC) as part of the resolution, without admitting or denying the
findings.
From October 2015 to December 2022, Interactive Brokers
failed to identify more than 4.2 million instances of free-riding in options
and issued options transactions. Free-riding occurs when securities are
purchased and sold without full payment, violating Regulation T of the Federal
Reserve Board and FINRA Rules 4210 and 2010.
Scrutiny over Free-Riding Detection
FINRA determined that the firm’s automated surveillance
system did not detect free-riding in options. Required freezes on accounts
engaging in such activity were therefore not imposed.
The investigation also highlighted deficiencies in the
firm’s supervisory systems and written supervisory procedures (WSPs). According
to FINRA, these systems lacked measures to ensure compliance with regulations
designed to prevent free-riding.
Interactive Brokers Settles with $2.25 Million Fine
Interactive Brokers agreed to a censure and a $2.25 million
fine. The firm has since updated its surveillance systems and WSPs to address
the identified deficiencies.
This settlement concludes the matter. The firm has waived
its right to further procedural steps, and FINRA will include the disciplinary
action in its public records. Finance Magnates reached out to Interactive
Brokers for comment on this development. At the time of writing, the firm has
yet to provide a response.
tastytrade Fined $30K for Supervision Lapses
Earlier, FINRA imposed a $30,000 fine on tastytrade, a retail trading platform and US
subsidiary of IG Group, for failing to properly supervise its employees’
outside securities accounts between July 2021 and June 2023. The firm allegedly
failed to maintain adequate supervision of 84 outside securities accounts
belonging to 35 employees, as reported by Finance Magnates.
The investigation revealed delays in reviewing employee
trading activities, with 25 accounts left unchecked until the fourth quarter of
2021. Notably, 14 accounts went unreviewed until June 2023, when FINRA
conducted a cycle examination. FINRA also found deficiencies in tastytrade’s
written supervisory procedures for tracking mandatory reviews.
FINRA has reached a settlement with Interactive Brokers, a
member since 1995, over allegations of rule violations related to free-riding
in customer cash accounts. The firm accepted a Letter of Acceptance, Waiver,
and Consent (AWC) as part of the resolution, without admitting or denying the
findings.
From October 2015 to December 2022, Interactive Brokers
failed to identify more than 4.2 million instances of free-riding in options
and issued options transactions. Free-riding occurs when securities are
purchased and sold without full payment, violating Regulation T of the Federal
Reserve Board and FINRA Rules 4210 and 2010.
Scrutiny over Free-Riding Detection
FINRA determined that the firm’s automated surveillance
system did not detect free-riding in options. Required freezes on accounts
engaging in such activity were therefore not imposed.
The investigation also highlighted deficiencies in the
firm’s supervisory systems and written supervisory procedures (WSPs). According
to FINRA, these systems lacked measures to ensure compliance with regulations
designed to prevent free-riding.
Interactive Brokers Settles with $2.25 Million Fine
Interactive Brokers agreed to a censure and a $2.25 million
fine. The firm has since updated its surveillance systems and WSPs to address
the identified deficiencies.
This settlement concludes the matter. The firm has waived
its right to further procedural steps, and FINRA will include the disciplinary
action in its public records. Finance Magnates reached out to Interactive
Brokers for comment on this development. At the time of writing, the firm has
yet to provide a response.
tastytrade Fined $30K for Supervision Lapses
Earlier, FINRA imposed a $30,000 fine on tastytrade, a retail trading platform and US
subsidiary of IG Group, for failing to properly supervise its employees’
outside securities accounts between July 2021 and June 2023. The firm allegedly
failed to maintain adequate supervision of 84 outside securities accounts
belonging to 35 employees, as reported by Finance Magnates.
The investigation revealed delays in reviewing employee
trading activities, with 25 accounts left unchecked until the fourth quarter of
2021. Notably, 14 accounts went unreviewed until June 2023, when FINRA
conducted a cycle examination. FINRA also found deficiencies in tastytrade’s
written supervisory procedures for tracking mandatory reviews.
This post is originally published on FINANCEMAGNATES.
