FINRA Hits tastytrade with $30,000 Fine for Supervisory Violations

tastytrade, Inc. agrees to pay a $30,000 fine and implement supervisory improvements after failing to review employees’ outside securities accounts per FINRA rules.
Key Points:

• tastytrade failed to properly monitor outside securities accounts from July 2021 to July 2023, violating FINRA rules.
• The firm agreed to pay a $30,000 fine and received a censure in settlement with FINRA.

tastytrade, Inc., a financial services firm offering self-directed trading to retail investors, has settled with the Financial Industry Regulatory Authority (FINRA), agreeing to pay a $30,000 fine for failing to establish and enforce a supervisory system that met regulatory standards. The violations from July 2021 through July 2023 involved the firm’s inadequate monitoring and review of outside securities accounts held by its associated persons.

FINRA Hits tastytrade with $30,000 Fine for Supervisory Violations

FINRA reported that tastytrade failed to design written supervisory procedures (WSPs) to reasonably ensure the review of these accounts for potential violations of securities laws and FINRA rules. While the firm required employees to disclose outside securities accounts and obtain compliance approval to trade in them, its WSPs did not specify how these reviews should be documented or tracked.

tastytrade’s failure to review securities transactions in employees’ outside brokerage accounts became more apparent during the period in question, particularly in 2021 and 2022. Notably, in the fourth quarter of 2021, trades from the preceding quarter in 25 employees’ accounts went unreviewed. By the first quarter of 2022, delays in reviewing these transactions became widespread, with issues persisting until June 2023. tastytrade failed to review approximately 84 outside securities accounts belonging to 35 employees, including 14 accounts it did not review until FINRA’s cycle examination in June 2023.

As part of the settlement, FINRA has also censured tastytrade. The firm updated its WSPs and improved its supervisory systems in July 2023 to address the issues identified.

tastytrade has been a FINRA member since 2016 and has headquarters in Chicago, Illinois.

With 73 registered representatives, tastytrade provides self-directed trading to retail investors through its website and mobile applications.

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