As a legal broker, Interactive Brokers is fined by FINRA, SEC, and CFTC because of some inadvertence.
Interactive Brokers was fined $38 million in total penalties to the three US regulators, because of failure to flag suspicious activity and meet anti-money laundering requirements.
First, the broker-dealer must pay $15 million to the Financial Industry Regulatory Authority (FINRA) due to some cases of money-laundering during the last five years. According to FINRA, behind the success of Interactive Brokers from January 2013 until September 2018, the broker failed to provide some qualified resources to control suspicious activities.
Interactive Brokers is one of the largest electronic broker-dealers in the US and handle hundred of million dollars, but it failed to flag some activities that led to money-laundering. In addition, Interactive Brokers has to implement recommendations from a third-party consultant as the solution.
The second US regulator who sued the firm is the U.S. Securities and Exchange Commission (SEC). The agency found that Interactive Brokers missed some suspicious activity reports for many times. SEC charged the broker $11.5 million. However, Interactive Brokers did not admit or deny the SEC's statement.
Lastly, the broker has to pay the same amount of penalty to CFTC itself, because it is not able to carry out the responsibility. A regulated broker must supervise how its employees run the accounts, but Interactive Brokers executed orders for a person involved in a Ponzi-like scheme. Furthermore, CFTC charged another $706,214 as disgorgement.
Interactive Brokers itself respond to the demands cooperatively. The spokesperson said it will cooperate fully with the regulators in these inquiries. The significant steps that the broker had taken to expand and enhance the program were taken into account today.