Interactive Brokers $475,000 Fine Over Supervisory Failures.

Interactive Brokers has agreed to pay a fine of $475,000 to settle charges brought by the exchange over Supervisory Failures. The charges were related to alleged supervisory failures concerning corporate actions, as per the Letter of Acceptance, Waiver, and Consent (AWC) released by Nasdaq.

Between January 2020 and June 2021, Nasdaq found that Interactive Brokers failed to adequately process several corporate actions, such as reverse stock splits, due to deficiencies in its supervisory systems. This led to instances where orders were sent to the market with incorrect prices. Additionally, the firm’s procedures allowed customers to sell shares they did not own in two instances.

Interactive Brokers Agrees to $475,000 Fine Over Supervisory Failures

Nasdaq determined that Interactive Brokers violated its rules requiring member firms to maintain supervisory systems designed to ensure compliance and found inadequate risk management controls for erroneous orders, particularly for orders involving warrants.

While not admitting or denying the findings, Interactive Brokers agreed to the censure, fine, and address the issues raised. The firm has reportedly taken steps to compensate affected customers.

Interactive Brokers has faced fines and penalties from regulatory authorities in recent years. In 2018, it was fined $5.5 million by FINRA for violations related to naked short positions and supervisory failings. In 2020, it paid a combined $38 million in penalties to three US regulators for anti-money laundering breaches.

Additionally, fines were imposed by NYSE Arca and FINRA, and its former AML Compliance Officer faced penalties. Most recently, in September 2023, the Australian financial markets regulator fined its local unit for failure to identify suspicious trading.

Despite these regulatory challenges, Interactive Brokers continues to provide online trade execution and clearing services to institutional and individual investors.

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 various 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. 

Discover more in our Complete Review.