FINRA Fines ViewTrade Securities $40,000 for Supervisory Failures

FINRA has fined ViewTrade Securities, Inc. $40,000 after an investigation revealed serious supervisory deficiencies. The firm, a FINRA member since 1999, was found to have violated FINRA Rules 3110 and 2010 due to its failure to adequately monitor the outside brokerage accounts of its registered representatives.

The Financial Industry Regulatory Authority (FINRA) launched its investigation after identifying lapses in ViewTrade‘s supervisory system dating back to January 2020. The investigation revealed that ViewTrade lacked proper processes to ensure the timely receipt and review of duplicate account statements from employees’ disclosed brokerage accounts. In some instances, these statements went unreviewed for more than six months, which is a violation of industry rules aimed at preventing insider trading and other potential securities abuses.

This latest fine follows a $250,000 penalty imposed on ViewTrade in August 2022 for failing to implement an effective anti-money laundering (AML) program and for inadequate supervision of market access risks. As part of that settlement, the firm had agreed to hire an independent consultant to address its compliance issues.

In this recent case, FINRA found that ViewTrades internal procedures failed to address critical supervisory functions, such as following up on missing account statements and conducting comprehensive reviews to detect potential violations. This led to a censure in addition to the $40,000 fine.

As part of the settlement, ViewTrade has agreed to remedy these issues within 90 days. A senior member of the firms management will be required to certify that the firm has implemented a supervisory system that complies with FINRA rules, including Rule 3110, which governs the supervision of associated persons.

This action underscores FINRAs commitment to enforcing high supervisory and compliance standards across the financial services industry, with a focus on protecting market integrity. ViewTrade accepted the terms of the settlement without admitting or denying the findings.

In a related matter, the Securities and Exchange Commission (SEC) imposed penalties on ViewTrade in August 2023 for widespread recordkeeping failures. ViewTrade was one of 26 firms penalized for violating federal securities laws by failing to maintain and preserve electronic communications as required. This recordkeeping failure impaired the SECs ability to conduct thorough investigations.

The violations stemmed from the use of unauthorized communication methods—referred to as off-channel communications—that were not properly retained as part of the firms‘ records. The SEC’s investigation revealed that these violations involved personnel at multiple levels of management, including senior executives.

As part of a broader settlement with the SEC, ViewTrade and the other firms admitted to the violations and agreed to pay penalties. The settlement, which included fines totaling $392.75 million across the 26 firms, emphasizes the importance of maintaining proper records to ensure investor protection and regulatory oversight. In addition to the fines, the firms have begun strengthening their compliance practices to prevent similar violations in the future.

Final Thoughts

The penalties imposed on ViewTrade Securities by both FINRA and the SEC serve as a critical reminder of the importance of robust compliance and supervision within the financial sector. As regulatory bodies continue to enforce strict oversight to protect investors and maintain market integrity, firms must prioritize their internal controls and compliance policies. For ViewTrade, these actions highlight the need for continual improvement in regulatory practices to avoid future violations and safeguard the trust placed in financial institutions.