The broker was charged with supervisory failings regarding naked short positions for a period of at least three years.
The Financial Industry Regulatory Authority (FINRA) announced on Monday that it has fined Interactive Brokers LLC, a global electronic brokerage, $5.5 million for violating Security and Exchange Commission (SEC) Regulation SHO and supervisory failings regarding naked short positions for a period of a minimum of three years.
Naked short selling is the sale of shares that a trader has neither borrowed nor made arrangements to borrow. As required by the SEC, after completing a short sale transaction, firms are required to purchase or borrow the securities to limit ongoing naked short positions.
According to the statement, between July 2012 to June 2015 FINRA found that the broker’s supervisory system was not up to scratch to comply with the SEC’s regulations. In addition, Interactive continuously ignored “red flags” that indicated that the supervisory systems and procedures in place were unsatisfactory. This was alerted through internal audit findings, multiple internal warnings from its clearing and compliance personnel, the broker’s own annual risk assessments, and FINRA exam findings.
Despite Interactive being aware of the deficiencies of its systems, the broker didn’t make any changes to improve this until the middle of 2015. This meant Interactive didn’t timely close-out more than 2,300 fails-to-deliver. The broker also accepted and executed short orders in those securities without first borrowing (or arranging to borrow) the security around 28,000 times.
Interactive Brokers Failed to Act in Time
Commenting on the ruling, Susan Schroeder, the Executive Vice President of FINRA, Department of Enforcement, said: “firms that are aware of deficiencies in their supervisory systems must promptly remediate them. In this case, the firm internally identified the problems, yet did not revise its supervisory systems for more than three years, creating the potential for negative impact to the markets and investor harm.”
While Interactive did consent to the entry of FINRA’s findings, the broker has neither admitted to nor denied the charges, the statement says.
The Financial Industry Regulatory Authority (FINRA) announced on Monday that it has fined Interactive Brokers LLC, a global electronic brokerage, $5.5 million for violating Security and Exchange Commission (SEC) Regulation SHO and supervisory failings regarding naked short positions for a period of a minimum of three years.
Naked short selling is the sale of shares that a trader has neither borrowed nor made arrangements to borrow. As required by the SEC, after completing a short sale transaction, firms are required to purchase or borrow the securities to limit ongoing naked short positions.
According to the statement, between July 2012 to June 2015 FINRA found that the broker’s supervisory system was not up to scratch to comply with the SEC’s regulations. In addition, Interactive continuously ignored “red flags” that indicated that the supervisory systems and procedures in place were unsatisfactory. This was alerted through internal audit findings, multiple internal warnings from its clearing and compliance personnel, the broker’s own annual risk assessments, and FINRA exam findings.
Despite Interactive being aware of the deficiencies of its systems, the broker didn’t make any changes to improve this until the middle of 2015. This meant Interactive didn’t timely close-out more than 2,300 fails-to-deliver. The broker also accepted and executed short orders in those securities without first borrowing (or arranging to borrow) the security around 28,000 times.
Interactive Brokers Failed to Act in Time
Commenting on the ruling, Susan Schroeder, the Executive Vice President of FINRA, Department of Enforcement, said: “firms that are aware of deficiencies in their supervisory systems must promptly remediate them. In this case, the firm internally identified the problems, yet did not revise its supervisory systems for more than three years, creating the potential for negative impact to the markets and investor harm.”
While Interactive did consent to the entry of FINRA’s findings, the broker has neither admitted to nor denied the charges, the statement says.
58% of UK Investors Choose Professional Guidance over 'Finfluencers’
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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