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 Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term 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 Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term 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