ASIC Fines Interactive Brokers for Allowing Suspicious Trading

<p dir="ltr">The Australian financial markets regulator has slapped the local unit of Interactive Brokers with a monetary penalty of AU$832,500 (about US$538,000) for being 'negligent' in its failure to identify suspicious trading conducted by one of its clients.</p><p dir="ltr">Interactive Brokers Fined in Australia</p><p dir="ltr">Announced today (Wednesday), Interactive Brokers Australia Pty Ltd paid the fine to comply with an infringement notice from the Market Disciplinary Panel (MDP) of the <a href="https://www.financemagnates.com/tag/asic/">Australian Securities &amp; Investments Commission</a> (ASIC). The panel called the company's actions' reckless' for allowing further suspicious trading even after the regulator raised concerns.</p><p dir="ltr">The broker has also been blamed for not maintaining the necessary organizational and technical resources.</p><p dir="ltr">Interactive Brokers Failed to Comply</p><p dir="ltr">The penalty was slapped against the brokerage platform for one client's suspicious trading activities. The broker allowed the 'experienced trader' to place some orders with the intention of increasing the closing price of an ASX-listed company stock.</p><p dir="ltr"><a href="https://www.financemagnates.com/terms/a/asic/">ASIC</a> contacted <a href="https://www.financemagnates.com/tag/interactive-brokers/">Interactive Brokers</a> on 14 October 2021 after the trader's activities triggered the regulator's alerts. Interactive Brokers' own surveillance system also triggered 44 'marking the close' alerts between 10 February and 13 October 2021 due to the client's activities.</p><p dir="ltr">According to ASIC, Interactive Brokers took too long to close the alerts, the broker did not receive meaningful review notes on the alerts, and there was a lack of action to address the suspicious trading. Additionally, Interactive Brokers did not lodge a suspicious activity report with the regulator until 5 November 2021.</p><p dir="ltr">"The MDP considered that these circumstances demonstrated that Interactive Brokers did not have sufficient staff with the necessary skills, knowledge or experience to properly assess the alerts or those staff were not adequately supervised to ensure they were doing their job," ASIC stated. </p><p dir="ltr">"The MDP noted that analysis of high-risk alerts must begin on the relevant trade date and review of all alerts should be concluded within a fortnight."</p><p dir="ltr">Earlier this year, ASIC issued <a href="https://www.financemagnates.com/forex/asic-halts-interactive-brokers-australias-stock-lending-products/">two stop orders against the Aussie unit of Interactive Brokers</a>, temporarily preventing it from issuing Stock Yield Enhancement Program (SYEP) Derivatives to retail investors for some time. Those orders came as the regulator found deficiencies in the product's target market determination (TMD) and the broker's product disclosure statement (PDS).</p>

This article was written by Arnab Shome at www.financemagnates.com.