Release Number 8794-23
CFTC Orders Interactive Brokers to Pay $20 Million for Recordkeeping and Supervision Failures for Widespread Use of Unapproved Communication Methods
September 29, 2023
Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Interactive Brokers Corp., an introducing broker, and Interactive Brokers LLC, a futures commission merchant, for failing to maintain and preserve records that were required to be kept under CFTC recordkeeping requirements, and failing to diligently supervise matters related to their businesses as CFTC registrants.
The order requires Interactive Brokers to pay a $20 million civil monetary penalty, to cease and desist from further violations of recordkeeping and supervision requirements, and to engage in specified remedial undertakings. Interactive Brokers admits the facts detailed in the order.
The order finds from at least 2019 to the present, Interactive Brokers failed to stop its employees, including those at senior levels, from communicating using unapproved communication methods, including messages sent via personal text and WhatsApp. The firm was required to keep certain of these written communications because they related to the firm’s CFTC-registered businesses. These written communications generally were not maintained and preserved by Interactive Brokers, and the firm generally would not have been able to provide them promptly to the CFTC if and when requested.
The order also finds the widespread use of unapproved communication methods violated Interactive Brokers’ internal policies and procedures, which generally prohibited business-related communication taking place via unapproved methods. Further, some of the same supervisory personnel responsible for ensuring compliance with the firm’s policies and procedures themselves used non-approved methods of communication to engage in business-related communications, in violation of firm policy.
Since December 2021, the CFTC has imposed $1.117 billion in civil monetary penalties on 20 financial institutions for their use of unapproved methods of communication, in violation of CFTC recordkeeping and supervision requirements. [See CFTC Press Release Nos. 8470-21; 8599-22; 8699-23; 8701-23; 8762-23; 8763-23]
Related Civil Actions
The Securities and Exchange Commission (SEC) today also announced entry of an order filing and settling charges against Interactive Brokers and imposing a civil monetary penalty for recordkeeping and supervision violations related to the use of unapproved methods of communication.
The CFTC Division of Enforcement staff responsible for this action are Devin Cain; Alejandra de Urioste; R. Stephen Painter, Jr.; Lenel Hickson, Jr.; and Manal M. Sultan.