SpeedTrader Sees Huge $165,000 Fine For Inadequate Controls
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The Financial Industry Regulatory Authority (FINRA) has fined SpeedTrader Inc. $165,000 for not properly supervising trading activities that could be manipulated. The authority also accused the company of not upholding adequate market access control. SpeedTrader has agreed to pay the fine and promises to pay attention to the warnings from the regulator.
SpeedTrader Has Agreed To Pay The $165,000 Fine Without Accepting The Accusations
SpeedTrader Inc., which helps day traders and big clients, agreed to FINRA’s decision to pay the fine and accepted the censure without saying it did anything wrong. The Financial Industry Regulatory Authority said the latest issue that led to penalizing SpeedTrader started from November 2017 till January 2020.
FINRA found that SpeedTrader did not set up a good system to spot and stop possible manipulative trading. The company let about 570 customers, including many day traders from China, access the market directly.
According to the regulator, the company used an automated third-party system to watch trading activities but didn’t adjust it for its own business or customers. It did not set up, write down, or keep proper market access rules and methods.
The authority also noted that SpeedTrader didn’t check on suspicious trading alerts properly and gave only one trader ID per account, even when more traders were allowed. This made it hard to know those behind the possibly bad trades.
FINRA Accuses SpeedTrader Of Breaking Market Access Rules
Apart from supervision issues, the Financial Industry Regulatory Authority reported that SpeedTrader broke market access rules by failing to manage customer credit limits by itself. The company wrongly depended on clearing firms to handle and monitor these limits.
As part of the deal, SpeedTrader agreed to confirm in 90 days that it has fixed the problems FINRA found and set up better supervision procedures and systems. This isn’t the first time SpeedTrader has faced regulatory action. In 2015, several exchanges issued a total fine of $595,000 to the firm for similar issues with supervision and market access.
The new fine will be split between FINRA and some stock exchanges, with $13,200 going straight to the regulator.
SpeedTrader has sent a payment plan and agreed not to challenge the decision. This settlement is just one of many actions FINRA has taken recently. The authority has also fined other financial institutions for different rule violations.
TradeZero America, Inc., a trading platform in Brooklyn that has been part of FINRA for eight years, was fined $250,000. The fine was for multiple regulatory violations between July 2020 and October 2022. These include working with social media influencers wrongly and sending out inaccurate privacy notices to customers.
