Apex Clearing Corp. to pay $3.2M over improper disclosures, distorted investor compensation

A clearing firm agreed to pay $3.2 million and certify that it put in place compliance measures under an agreement with the Financial Industry Regulatory Authority (FINRA).

Clearing firms are the “middle men,” who handle financial transactions between buyers and sellers, related to stocks, bonds, futures options, derivatives, loans, and more. They are responsible for making certain regulatory filings and disclosures also.

Texas-based Apex Clearing Corp. also handled lending for fully paid securities, a practice in which a firm “borrows” customers’ shares, sometimes to lend them to a third party, in exchange for remuneration. Customers must opt in to full-paid securities lending, and they must receive disclosures.

Since January 2019, Apex failed to create, maintain, and apply written procedures for supervisors involved with its FPSL program in order to comply with FINRA Rule 4330, the self-regulatory organization alleged.