Almost 5 million USD penalties for four major institutions, including Interactive Brokers

4 750 000 $ a total financial penalty imposed on four large investment firms operating on the NASDAQ, NYSE and Bats stock exchanges. This is the result of the actions of FINRA (Financial Industry Regulatory Authority), the American self-regulatory organization in the USA.

The reason is the lack of adequate security

The investigation conducted by FINRA in cooperation with the aforementioned exchanges indicated that four companies, namely Deutsche Bank, Citigroup, JP Morgan, and Interactive Brokers were to violate the provisions resulting from the Securities Exchange Act. These are the rules for controlling financial risk. But what exactly is it about?

The aforementioned institutions ensured access to the market for a large group of clients, without observing clearly defined control rules, which are to protect against the introduction of incorrect or duplicated orders to the market. But this is not the end. Among the allegations is also improper prevention of orders that exceed capital and credit limits, as well as failing to monitor the actions of customers who could manipulate the market.

Punished:

• Deutsche Bank for 2,5 million,
• Citigroup for 1 million,
• JP Morgan for the amount of 800 thous. $,
• Interactive Brokers for the amount of 450 thous. $.

All companies agreed to pay fines, however, none of them officially admitted the allegations.

Extract from the FINRA statement:

"It is important that companies have proper market access procedures in order to adequately monitor errors and potential risks that may be detrimental to the integrity of the domestic securities market."

The amount of penalties was determined by factors such as the number of erroneous transactions and potential manipulations and their impact (real and theoretical) on the rates of selected instruments.

The official announcement