The Securities and Exchanges Commission (SEC) has slapped Interactive Brokers with a staggering penalty after the brokerage firm failed to report Suspicious Activity Reports (SARs) for microcap securities trades.
The SEC penalty stands at $11.5 million while parallel actions from FINRA and the CFTC draw up a total bill of $38 million following a series of “anti-money laundering failures”.
According to a press release published by the SEC, over a one-year period: “Interactive Brokers failed to file more than 150 SARs to flag potential manipulation of microcap securities in its customers’ account.”
SEC charges interactive brokers with repeatedly failing to file suspicious activity reports https://t.co/YA9McvPbSi
— U.S. Securities and Exchange Commission (@SECGov) August 10, 2020
The order finds that “Interactive Brokers failed to recognise red flags concerning these transactions”, while also failing to investigate suspicious activity and file SARs in a timely fashion.
Interactive Brokers agreed to settle the case by paying the $38 million penalty, which arguably pales in significance compared to its $1.2 billion in profit in the previous fiscal year.
Although the firm mainly offers its clients exposure to traditional markets, it has been allowing customers to opt for more speculative investments like Bitcoin, all of which is traded on the CME’s Bitcoin futures contract as stated on its website.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.