Huge penalties for Interactive Brokers - a total of $ 38 million in fines

The American broker Interactive Brokers was fined by as many as three independent institutions. In total, he collected $ 38 million in fines. This is not the first millionth penalty for this broker. Earlier ones paid quickly and continued to operate on the border of regulations.

She charged the highest penalty Financial industry regulatory authority (FINRA), which valued the broker's deficiencies at $ 15 million. The penalties were imposed by USD 11,5 million Securities and Exchange Commission (SEC), which assessed it, inter alia, for irregularities in the broker's internal control system. The SEC also emphasizes that the broker - knowingly or not - did not register suspicious transactions on the so-called penny companies. She added $ 11,5 million in fines Commodity Futures Trading Commission (CFTC).

Admission of guilt and repentance

The company does not intend to appeal, which is a well-known form of defense, e.g. in Poland. Moreover, he not only pleads guilty, but also promises to hire external consultants to deal with internal control and prevent attempts to use the company for money laundering. The more so as the procedure could have continued for years, and the SEC found 150 suspicious transactions. We are only talking about those that clearly indicate their purpose, which was to shift money between accounts and assets in order to lose the trace of their origin.

Suspicious Haena Park company

Interactive Brokers was targeted by regulators in 2017. It was then that Haena Park was sentenced to 3 years in prison and had to pay a hefty fine of $ 23 million for multiple financial frauds. Meanwhile, Interactive Brokers not only cooperated with it and its many companies, but also failed to demonstrate this in subsequent reports. What's more - Haena Park maintained that she earned an average of 50% a year, while a broker who had daily access to her accounts, must have known that it was quite the opposite - she quickly lost $ 19,5 million of $ 20 million entrusted to her by clients. However, Interactive Brokers earned as much as PLN 706 on these transactions. $ 214, so it can be concluded that the broker was just comfortable with the big trade.

Million dollar penalties for US brokers

This is not the first million dollar penalty for the same US broker. In August 2018, the Forex Club portal described a penalty imposed by FINRA (Financial Industry Regulatory Authority), which announced in the announcement information about a fine for Interactive Brokers LLC amounting to USD 5,5 million. The reason was the offenses committed by the broker over the previous three years.

A year earlier, the broker received a total fine of USD 6 million, imposed by the SEC and FCA. Additionally, in August 2017 we reported that IB received a fine of PLN 450 from FINRA. USD.

Previously, it ignored several internal auditing warnings from lawyers dealing with the settlement of transactions. The conclusions of internal risk assessments and the increasingly frequent inconsistencies in the company's procedures were also ignored. According to FINRA's calculations, the broker executed as many as 28 short trades without the security required by the SEC. He also had a number of other faults.

At that time, the representatives of Interactive Brokers did not admit the charges, but did not appeal against them, and they quickly paid the imposed financial penalty. It will probably be the same this time, because despite the impression made by the size of subsequent penalties - they are clearly calculated as a risk of running an extremely profitable business that is worth taking.