Interactive Brokers Settles Nasdaq Charges: Compliance Focus

Interactive Brokers agreed to pay a $475,000 fine to resolve charges related to supervisory failures. The allegations against Interactive Brokers between January 2020 and June 2021 involve mishandling corporate actions and breaching Nasdaq compliance standards.

According to an investigation conducted by Nasdaq Enforcement, Interactive Brokers failed to adequately process five corporate actions due to deficiencies in its supervisory systems. This resulted in orders being sent to the market with incorrect prices, and in two instances, customers could sell shares they did not own.

While Interactive Brokers neither admitted nor denied the findings, it consented to the settlement and fine. Moreover, the firm has taken remedial actions to address the issues identified by Nasdaq, including compensating affected customers.

Interactive Brokers Settles Nasdaq Charges: Regulatory Compliance

This settlement is part of Interactive Brokers‘ broader history of regulatory scrutiny. Over the past six years, the company has faced fines and penalties from various regulatory bodies. In 2018, the Financial Industry Regulatory Authority (FINRA) fined it $5.5 million for violations related to naked short positions and supervisory failings. Subsequent penalties included a $38 million settlement with three US regulators in 2020 over anti-money laundering breaches, among others.

The recent settlement shows the importance of robust supervisory systems and compliance measures in the financial industry, particularly for entities like Interactive Brokers that facilitate online trade execution and clearing services for institutional and traders.

As Interactive Brokers continues to navigate regulatory challenges, the case highlights the importance of transparency, accountability, and diligence in maintaining market integrity and protecting investor interests. It also reminds brokerage firms of the consequences of failing to meet regulatory standards and the need to review and enhance compliance mechanisms continuously. Ultimately, this case’s resolution emphasizes the industry’s ongoing efforts to uphold regulatory standards and ensure the fair and orderly functioning of markets.

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