Coin World News Report:
The Financial Industry Regulatory Authority (FINRA) has issued a condemnation order against Interactive Brokers (NASDAQ stock code: IBKR) and imposed a fine of $475,000 for errors in its stock lending program. The brokerage firm has reached a settlement with the regulatory agency.
Calculation Error
According to the official “Acceptance, Waiver, and Consent (AWC)” letter, FINRA detailed that Interactive Brokers incorrectly calculated the excess stock quantities listed on European exchanges that could be returned to clients who borrowed stocks under the stock lending program.
Due to the error during the period from June to December 2021, the brokerage firm returned borrowed stocks in over 800 instances where they should not have been returned, resulting in the company incurring or increasing securities deficits.
Therefore, according to the regulatory agency,
the Connecticut-based brokerage firm
failed to establish, maintain, and enforce supervisory systems, including reasonably designed written supervisory procedures (WSP), to fulfill its possession and control obligations.
Unregistered Principals
In addition, the regulatory agency emphasized that the brokerage firm allowed unregistered associated persons to lead and supervise certain software development work related to its securities financing activities, including the stock lending program from January 2021 to December 2023, and added that such individuals must be registered with FINRA.
However, as Interactive Brokers accepted the penalties and other actions by the U.S. Financial Industry Regulatory Authority, the regulatory agency “will not bring any charges alleging violations of the same factual findings against [the broker].”
Interestingly, Interactive Brokers also
faces scrutiny from the Australian financial market regulatory agency
as its stock lending program there had compliance issues last year. Under the stock lending program, brokers allow shareholders of certain companies to lend their stocks to other traders who then short sell those stocks.
Meanwhile, recently,
Bloomberg
reported that
Interactive Brokers is one of the bidders
for the acquisition of Danish brokerage giant Saxo Bank. Other bidders include Altor Equity Partners and Centerbridge Partners.
