← Broker database 2024-07-31
SpeedTrader Fined $165,000 for Inadequate Manipulation Surveillance and Market Access Controls
According to FINRA, SpeedTrader, Inc was censured and fined a total of $165,000, of which $13,200 is payable to FINRA, on July 31, 2024, for failing to establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with applicable federal securities laws and FINRA rules prohibiting potentially manipulative trading.
The firm implemented its third-party surveillance system's default parameters without assessing whether those parameters were reasonably tailored to the firm's business model, including the type and nature of the firm's customers' order flow. Furthermore, the firm assigned only one trader identification number for each customer account, even when the account had more than one authorized trader. Therefore, the firm could not identify the specific traders responsible for exception alerts, which limited the firm's ability to effectively review for and supervise potentially manipulative trading.
The firm also closed alerts without reasonable follow-up and investigation of the underlying trading, including multiple alerts indicating patterns of suspicious trading by the same customer. The firm's comments for the alerts were often repetitive and sometimes suggested an apparent misunderstanding of the nature of the trading. The firm's written supervisory procedures failed to provide reasonable guidance as to how the firm should review exception alerts to determine whether they were indicative of potential manipulative trading that should be escalated.
Additionally, the firm failed to establish, document, and maintain financial risk management controls and procedures reasonably designed to limit the financial and regulatory risks associated with its market access business activity. The firm did not implement a system or controls to set the appropriate credit thresholds for each customer to which the firm provided market access, instead relying on its clearing firms to do so. A lower fine was imposed after considering the firm's revenue and financial resources.