Interactive Brokers to pay over $1 million to settle CFTC charges for supervision failures
Electronic trading major Interactive Brokers will have to pay over $1 million in order to settle charges brought by the Commodity Futures Trading Commission (CFTC).
The regulator today issued an order simultaneously filing and settling charges against Interactive Brokers LLC for failing to diligently supervise its employees’ handling of exchange fees charged to customers. The order requires Interactive Brokers to cease and desist from violating the CFTC regulation addressing supervision, pay $710,828.14 in disgorgement with credit for money paid to affected customers, and pay a $300,000 civil monetary penalty.
According to the order, from approximately January 2015 to December 2021, Interactive Brokers failed to ensure that its employees accurately assessed exchange fees for customer trades. In particular, Interactive Brokers failed to implement necessary changes to exchange fee schedules, and thus charged customers executing certain spread trades the non-member exchange fee applicable to outright trades.
Although Interactive Brokers charged customers the higher fee, it paid the exchange the lower fee applicable to spread trades. As a result, Interactive Brokers overcharged its customers a total of $710,828.14.
Interactive Brokers represents that where it confirmed that a current customer was overcharged, it refunded the amount of the overage. Interactive Brokers also notified former affected customers about how to obtain their overage refund.