Electronic trading major Interactive Brokers LLC has agreed to pay a fine of $650,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

Between November 2019 and December 2024, Interactive Brokers failed to exercise reasonable due diligence before approving certain customer accounts that were not managed or advised by financial advisors or other third-parties (Self-Directed Customers) to trade options.

During this period, the brokerage used a primarily automated system to approve or disapprove customers for options trading. However, the firm’s system was not reasonably designed and the firm approved certain Self-Directed Customers for options trading despite red flags that options trading was potentially inappropriate for them.

The firm thus violated FINRA Rules 3110, 2360, and 2010.

During the same period, Interactive Brokers failed to maintain required records reflecting Interactive Brokers’s automated disapproval of certain Self-Directed Customers for options trading.

The firm therefore violated FINRA Rules 2360, 4511, and 2010.

On top of the fine of $650,000, Interactive Brokers has agreed to a censure.