CFTC fines Interactive Brokers $20 million over WhatsApp messages
Since December 2021, the CFTC has slapped fines totaling roughly $1.117 billion on two dozen financial institutions, citing unendorsed communication channels that contravene CFTC’s recordkeeping and supervision mandates.
The Commodity Futures Trading Commission (CFTC) handed down a $20 million penalty to Interactive Brokers Corp. and Interactive Brokers LLC on Wednesday over allegations of recordkeeping lapses and supervision failures.
The twin entities, an introducing broker and a futures commission merchant respectively, reportedly neglected to maintain and preserve requisite records, violating CFTC protocols. Additionally, they are charged with laxity in overseeing matters tied to their CFTC-registered operations.
In the settlement, which the CFTC announced today, Interactive Brokers has consented to pay the hefty fine and has been directed to halt any further breaches of recordkeeping and oversight stipulations. Additionally, the firm must embark on certain corrective actions. Interactive Brokers acknowledged the order’s detailed infractions.
$20 million from a total of $1.117 billion paid by two dozen financial institutions
Details unearthed in the probe indicate that, starting from 2019 onward, Interactive Brokers overlooked instances of their employees, even those in senior positions, leveraging unsanctioned communication platforms.
Notably, personal texts and WhatsApp exchanges came into play. Mandated to archive specific written interactions linked to their CFTC-affiliated operations, Interactive Brokers purportedly overlooked this requirement. Consequently, if the CFTC sought these records, the firm’s response would likely have been wanting.
Further revelations highlight that such unendorsed communication methods went against Interactive Brokers’ internal guidelines, which largely frowned upon business-linked exchanges via unsanctioned channels. Adding to the conundrum, some supervisory figures who were tasked with upholding these rules ironically breached them, leveraging non-compliant communication modes for business correspondences.
This is hardly an isolated incident. Since December 2021, the CFTC has slapped fines totaling roughly $1.117 billion on two dozen financial institutions, citing unendorsed communication channels that contravene CFTC’s recordkeeping and supervision mandates.
Simultaneously, the Securities and Exchange Commission (SEC) has stepped into the fray, disclosing its own order against Interactive Brokers. The SEC’s grievance similarly relates to recordkeeping and supervision lapses linked to the use of unapproved communication methods, culminating in an added monetary penalty for the firm.
