Moomoo Financial Inc., formerly known as Futu Inc, has agreed to pay a fine of $125,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

During the relevant period, Moomoo acted as an introducing broker and had an omnibus account at both of its clearing firms. Moomoo’s omnibus accounts held, among other things, customer options positions. Moomoo did not use its clearing firms or a third-party service provider to report options positions to the Large Options Positions Report (LOPR) on its behalf.

Since June 2019, Moomoo has lacked a reasonable system, including written supervisory procedures (WSPs), concerning LOPR reporting. Since that time, the firm’s WSPs have stated that a designated options supervisor is responsible for reporting options positions in accordance with FINRA requirements.

The WSPs do not identify how often the supervisor should assess or report options positions or provide for any supervisory review to ensure that the reporting is accurate and complete.

And until March 2023, the firm had no system or process in place to identify or report its customers’ options positions held in omnibus accounts to the LOPR.

In March 2023, Moomoo implemented a tool to identify and report to the LOPR customer options positions held in its omnibus accounts. Moomoo also disclosed to FINRA that, to that point, it had not been complying with its LOPR reporting obligations.

Since March 2023, Moomoo has had operating procedures that describe how to identify reportable

options positions and how to report those positions to the OCC for inclusion in the LOPR file. However, the operating procedures do not indicate how often the LOPR reporting steps should be taken, nor do they provide for any supervisory review of the reporting process or of the accuracy of the data reported to the LOPR.

Between June 2019 and March 2023, Moomoo failed to report 4,192 positions to the LOPR in 20,067 instances because it failed to identify and report reportable options positions of its customers that were cleared and held on an omnibus basis.

After the firm implemented a LOPR reporting system, it had a separate reporting failure.

Between March 2023 and June 2023, Moomoo failed to report 87 positions to the LOPR because it deleted expiring option positions from its reports to the LOPR. After FINRA alerted the firm to this issue, it ceased deleting those positions from its LOPR reporting.

Therefore, Moomoo violated FINRA Rules 2360(b)(5), 3110, and 2010.

On top of the $125,000 fine, the firm has agreed to a censure and an undertaking that a member of its senior management who is a registered principal of the firm must certify in writing that the firm has remediated the issues and implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rules 2360(b)(5) and 2010.