- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2024-04-29T19:02:00
Online brokerage services provider TD Ameritrade agreed to pay a $600,000 fine for violations of Financial Industry Regulatory Authority (FINRA) rules over its automated approval system that allegedly allowed inexperienced traders to engage in options trading.
TD Ameritrade used an automated, electronic system to issue approvals and denials for customer options trading requests that was not reasonably designed to catch inconsistencies in customers’ descriptions of their trading experience, as well as other factors that might lead to their application being denied, according to a FINRA order published Friday.
From November 2019 to October 2022, TD Ameritrade approved 1,288 customer applications for advanced options trading, despite many of those customers not having the requisite three years of trading experience or levels of income and net worth required by the firm’s policies and procedures, FINRA said.
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