The Financial Industry Regulatory Authority announced that it has censured and fined online brokerage firm Interactive Brokers LLC $400,000 for a series of compliance failures that span more than a decade in total, including underreporting of customer complaints, delayed disclosure of regulatory actions, and inaccurate filings regarding the firm’s foreign affiliates.
According to FINRA, from January 2020 through at least June 2022, Interactive Brokers failed to accurately report statistical and summary data on written customer complaints received by the firm. FINRA stated one example in which, between June and August 2021, the firm failed to report at least 300 written customer complaints regarding the functionality of the company’s website, poor customer service, and other issues. This misalignment was found to be exacerbated by written supervisory procedures that referenced outdated or incorrect regulatory standards.
As a result, the firm was found to have violated Rule 4530, which requires that member firms report certain customer complaints; Rule 3110, which requires that firms maintain and enforce written procedures; and Rule 2010, which requires high standards of commercial conduct. FINRA did say that Interactive Brokers self-reported some of the issues in January 2022.
Additionally from July 2011 to September 2022, FINRA reported that Interactive Brokers failed to timely report 91 regulatory actions, civil complaints, and arbitration claims. These included findings from domestic and foreign regulators that the firm or its affiliates had violated securities laws or rules. Twelve of these regulatory actions involved foreign control affiliates and were omitted from the company’s Uniform Application for Broker-Dealer Registration, commonly known as Form BD, in direct violation of FINRA bylaws and Rule 1122, which requires firms to keep their membership application up to date. Again, FINRA stated that the firm self-reported its failure to update its Form BD in January 2022.
Interactive Brokers consented to the findings without admitting or denying them. In addition to the $400,000 fine, the firm was censured and must submit a senior-management-level certification within 180 days confirming the firm has remediated its reporting failures.
As with many other firms, this is not the first time that Interactive Brokers has faced regulatory scrutiny. In December of last year, the company was fined $2.25 million for free-riding violations, and Interactive Brokers was one of 10 firms that the SEC cracked down on regarding private electronic communications in 2023.
Interactive Brokers online trading through self-directed accounts and clears transactions for retail and institutional customers. The firm is headquartered in Greenwich, Conn., and has more than 3,000 employees in offices across the world. The firm was founded in 1977 and, as of January 2025, had a consolidated equity capital of $17.5 billion.
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