FINRA Fines tastytrade $30,000 For Employee Account Oversight Failures
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FINRA has fined tastytrade, a retail trading platform in Chicago, $30,000 for not properly watching over its employees outside securities accounts. This happened between July 2021 and June 2023. FINRA said tastytrade did not look after around 84 accounts that belonged to 35 workers during this time.
FINRA stated that from July 2021 to July 2023, tastytrade did not create or follow a system to check these outside accounts. The company also did not keep written rules to supervise the accounts of workers.
FINRA Flags Oversight Issues In tastytrade’s Employee Account Reviews
The agency found that tastytrade was late in checking the trading activity of its employees. Some accounts were not checked at all. For example, 25 employees’ accounts from late 2021 were never reviewed. The problem got worse in early 2022, when almost all the reviews of workers’ accounts fell behind.
According to FINRA, 14 accounts were not looked at until June 2023, when the group did a regular check of the company. FINRA said tastytrade’s written rules did not include clear steps to track these important checks.
tastytrade is a part of IG Group, a large trading company from the UK. However, the news about the fine did not affect the stock price of IG Group.
The stock went up by 0.4% on Thursday and was priced at 951 pence. According to a report from IG Group, tastytrade earned nearly $71 million from June to August 2023. This was about a quarter of IG Group’s total income of $279 million during the same time.
FINRA Highlights Increased Scrutiny On Trading Firms’ Compliance Practices
tastytrade accepted what FINRA said, but it did not agree or disagree with the findings. The company agreed to pay the fine and accept a warning. tastytrade has been a member of FINRA since 2016 and has 73 workers at its Chicago office.
In July 2023, tastytrade updated its rules and improved its system for checking employees’ outside accounts. FINRA said the case shows that the group is focusing on making sure trading companies properly check their employees’ activities, especially as more people use retail trading platforms.
This fine on tastytrade comes after FINRA also punished Interactive Brokers, another trading company, last month. Interactive Brokers was fined $475,000 for not handling its share lending program properly.
Earlier this year, in June, another trading platform, TradeZero America, was fined $250,000 for breaking rules between July 2020 and October 2022.
