TradeStation Securities, Inc.Agree to pay a $700,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA)。Between January 2016 and March 2022, TradeStation failed to establish and implement a reasonable anti-money laundering program designed to prompt customers to report suspicious transactions.。

In order to monitor potentially suspicious transactions, the company relies primarily on alerts generated by automated monitoring systems provided by suppliers.。From 2016 to 2019, traditional surveillance systems generated more than 100,000 trade alerts, or about 100 alerts per trading day.。During this period, two to three analysts in the compliance department (who have other duties) are mainly responsible for reviewing trading alerts, some of which are false positives.。

In September 2019, the company switched to another vendor, which had a more robust automated transaction monitoring system that reduced the number of false positive alerts, generating about 50 alerts per trading day for the first six months after implementation.。In 2020, as the business grew, the company also added three analysts to assist in reviewing alerts.。

To resolve an alert issue, an analyst can turn off the alert, take no further action, send a warning notice to the customer, restrict the customer from trading securities, or close the customer's account。While addressing alerts, analysts can also escalate activity to the anti-money laundering unit to determine if a suspicious transaction report should be filed。From 2016 to 2022, analysts took different actions to deal with alerts。

For example, they often turn off alarms without taking further action, but they don't always record the conclusion that the investigation or activity is not suspicious.。They also appropriately restrict or close customer accounts, including suspicious trading activity, but again do not always record the reasons for their actions.。

In addition, analysts do not always report activities to the anti-money laundering unit to consider whether they should file suspicious transaction reports.。The company did not design a reasonable system to monitor how analysts review and resolve alerts, nor did it monitor whether they always report potentially suspicious transactions to the anti-money laundering department for consideration for reporting to FinCEN.。

As part of its annual independent anti-money laundering tests, the company realized in 2016 and 2017 that the above components of its anti-money laundering program could be strengthened.。The independent test report recommended that the company better document the process of reporting matters to the anti-money laundering department and track subsequent anti-money laundering investigations.。

However, the company did not fully implement these recommendations until March 2022; in 2018, the company began tracking anti-money laundering investigations and suspicious transaction report filings; and in 2022, the company further strengthened its procedures to record all matters reported to the anti-money laundering department.。

As a result of the above deficiencies between January 2016 and March 2022, analysts did not consistently report certain potentially suspicious transactions to the anti-money laundering department to assess whether suspicious transaction reports should be submitted.。As a result, the company violated FINRA Rule 3310 (a) and Rule 2010。

In addition, the company did not establish a reasonable written supervisory procedure (WSP) for the acceptance and resale of low-priced securities to comply with Section 5 of the Securities Act of 1933, thus violating FINRA Rules 3110 and 2010.。

In addition to the $700,000 fine, the company agreed to accept a reprimand.。