FINRA imposes $200k fine on tastytrade for alleged deficiencies in customer complaints handling
tastytrade, Inc., formerly known as tastyworks, Inc, has agreed to pay a fine of $200,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From at least January 2020 through December 2023, tastytrade failed to accurately report statistical and summary information regarding written customer complaints it received.
For instance, in a sample of customer communications from six non-consecutive weeks during the period, the firm received, but failed to report, 71 written customer complaints of varying subject matters.
Therefore, tastytrade violated FINRA Rules 4530(d) and 2010.
From at least January 2020 to December 2023, tastytrade did not establish, maintain and enforce a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 4530(d). The firm required its personnel to escalate “grievances” to the firm’s compliance department to determine whether such grievances were reportable under Rule 4530(d). However, the firm’s training and procedures, including written supervisory procedures, did not include specific factors that firm representatives or their supervisors should consider in determining whether escalation was warranted.
In early 2024, the firm revised its training and guidance regarding the identification of complaints required to be reported by Rule 4530(d) and included factors that should be considered in determining whether escalation is warranted.
By failing to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 4530(d), tastytrade violated FINRA Rules 3110 and 2010.
The firm has agreed to a censure in addition to the $200,000 fine.
tastytrade has been a FINRA member since March 2016 and has approximately 85 registered representatives. In February 2023, the firm changed its name from tastyworks, Inc. to tastytrade, Inc. The firm is headquartered in its one office in Chicago, Illinois and offers self-directed trading to retail investors through its website, desktop, and mobile applications.
