Interactive Brokers to Pay $20M Settlement to Resolve CFTC Charges

The Commodity Futures Trading Commission (CFTC) issued an order that simultaneously filed and settled charges against Interactive Brokers Corp., an introducing broker, and Interactive Brokers LLC, a futures commission merchant. The charges were related to their failure to maintain and preserve records as required by CFTC recordkeeping regulations and their inadequate supervision of matters pertaining to their activities as CFTC registrants.

According to the order, Interactive Brokers is mandated to pay a $20 million civil monetary penalty. They must also cease any further violations of recordkeeping and supervision requirements and undertake specific remedial actions as outlined in the order. Interactive Brokers has acknowledged the facts detailed in the order.

Furthermore, the order reveals that from at least 2019 to the present, Interactive Brokers did not prevent its employees, including senior personnel, from using unauthorized communication methods such as personal text messages and WhatsApp for business-related communication. This posed an issue because certain written communications of this nature were required to be maintained due to their relevance to the firm's CFTC-registered activities. However, these written communications were generally not preserved by Interactive Brokers, making it challenging for them to promptly provide them to the CFTC upon request.

The order also points out that the widespread use of unapproved communication methods went against Interactive Brokers' internal policies, which typically prohibited business-related communication through unauthorized channels. Furthermore, some of the supervisory personnel responsible for ensuring compliance with the firm's policies and procedures themselves engaged in business-related communications using non-approved methods, which was in violation of company policy.