The US’ Financial Industry Regulatory Authority (FINRA) has fined Interactive Brokers $475,000 for securities lending-related violations. Between June and December 2021, Interactive Brokers incorrectly calculated the number of excess shares of stocks listed on European exchanges it had available to return to customers from whom it had borrowed them as part of the firm’s fully paid securities lending program.
As a result, in more than 800 instances the firm returned borrowed shares when it should not have, which caused the firm to create or increase deficits for the relevant securities. During the same period, there was a failure to establish, maintain, and enforce a supervisory system.
Additionally, between January 2021 and December 2023, Interactive Brokers allowed an unregistered associated person to lead and oversee some software development efforts concerning the firm’s securities finance business, including the its securities lending program.