← Broker database 2022-09-02
Acorns Securities Fined $200,000 for Inaccurate Customer Account Statements
According to FINRA, Acorns Securities, LLC was fined $200,000 for sending customers account statements that inaccurately showed negative quantities of ETF shares with negative values, creating the false impression that customers held short positions in those funds.
The findings revealed that short selling is not even available on the firm's platform. In reality, these customers did not hold any positions in the ETFs but had withdrawn more cash from their accounts than they had deposited. The negative balances ranged from $0.01 to approximately $9,500, which the firm did not pursue customers to collect. The account statements also failed to show these negative cash balances and contained inaccurate information about investments in ETFs that customers did not hold, creating the misleading impression that customers could sustain additional losses or gains based on ETF values.
Despite receiving warnings from FINRA and another regulator, the firm continued to issue inaccurate statements. When the firm initiated a remediation process and enhanced its procedures, it still sent additional account statements that either inaccurately stated negative ETF share balances or reflected inaccurate cash balances. The firm also maintained inaccurate books and records by creating internal cash and securities reports showing negative ETF shares rather than negative cash balances.
The firm's supervisory failures were significant. It lacked a system for reviewing or confirming the accuracy of customer account statements or for correcting errors. The firm prepared multiple distinct reports requiring manual compilation to accurately identify cash held for customers, and accounts with negative cash balances appeared on a separate report that inaccurately stated these accounts had negative ETF shares. Even after additional FINRA warnings and implementing a monthly review process, the firm's procedures were inadequate, as they did not identify criteria for selecting statements for review or steps to identify and correct inaccurate information.
This case underscores the critical importance of accurate account statements for investors. Customers rely on these statements to understand their financial positions and make informed decisions. When firms fail to ensure accuracy and maintain proper supervisory systems, investors may make decisions based on false information, potentially leading to financial harm and loss of trust in the financial system.