FINRA Settles with Interactive Brokers Over $475,000 Fine

Interactive Brokers LLC has agreed to pay a $475,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA) following several regulatory violations related to its securities lending program. The firm’s errors occurred between June and December 2021, leading to multiple breaches of financial regulations.

FINRA Settles with Interactive Brokers Over $475,000 Fine

The violations primarily involved the incorrect calculation of excess shares available to return to customers from whom the firm had borrowed stocks. These stocks were on European exchanges, and due to the miscalculations, Interactive Brokers returned borrowed shares in over 800 instances when it should not have. These actions resulted in deficits in the firm’s control of the relevant securities, violating Section 15(c) of the Exchange Act, Rule 15c3-3(b)(1), and FINRA Rule 2010.

Furthermore, during the same period, the firm failed to implement and maintain adequate supervisory systems and written supervisory procedures (WSPs) to ensure compliance with possession and control obligations under Exchange Act rules. This failure constituted additional violations of FINRA Rules 3110 and 2010.

In a related violation, between January 2021 and December 2023, Interactive Brokers allowed an unregistered person to oversee software development for its securities finance business. This individual was involved in the firm’s securities lending program, a role that required registration with FINRA as an Operations Professional. The failure to register the person led to further breaches of FINRA Rules 1210 and 2010.

In addition to the fine, Interactive Brokers has agreed to a formal censure as part of the settlement.

Company Overview

Interactive Brokers caters to diverse requirements, offering competitive fees alongside a wide array of trading options such as stocks, ETFs, options, futures, and other assets spanning the globe. It distinguishes itself as a top-tier brokerage, particularly appealing to traders and investors seeking a straightforward trading experience. With Interactive Brokers’ user-friendly platform, users can execute trades seamlessly, benefiting from competitive spreads that enhance cost-effectiveness. 

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