FINRA Issues Supervision Fines to 4 Banks

FINRA Issues Supervision Fines to 4 Banks

FINRA Issues Supervision Fines to Top Financial Institutions

The Financial Industry Regulatory Authority (FINRA) has come to an agreement with four financial institutions including Deutsche Bank and JPMorgan to end claims related to failed supervision.

The four financial institutions, including Deutsche Bank Securities Inc., Citigroup, JPMorgan Chase and Institutional Brokers, LLC will collectively pay $4.75 million for violations of the Market Access Rule. FINRA claims the institutions failed to have adequate risk controls in place when letting customers access markets through their systems.

In each case, the institutions neither confirmed nor denied the charges but consented to the findings. Between May and July of this year, the institutions paid the following:

• Deutsche Bank was fined a total of $2.5 million.
• Citigroup was fined a total of $1 million.
• J.P. Morgan was fined a total of $800,000.
• Interactive Brokers was fined a total of $450,000.

The SEC Market Access Rule requires that broker-dealers that access an exchange or an alternative trading system or provide their customers with access to trading venues must properly control the financial and regulatory risks of providing such access.

In this case, the firms in question provided market access to numerous clients that executed millions of trades per day without adequate supervision.

Why Supervision is Important

The purpose of the Market Access Rule is to prevent financial institutions from risking their own financial condition and that of other participants in the market. The rule also helps to ensure the stability and integrity of the financial system and the securities markets.

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Deutsche Bank to Pay $157M in Volcker Rule Violations

Deutsche Bank to Pay $157M in Volcker Rule Violations

Two Federal Reserve probes into Deutsche Bank have resulted in the giant bank agreeing to pay nearly $157 million to settle claims that it violated the Volcker Rule by permitting traders to rig foreign exchange rates.

According to the Federal Reserve, the bank’s “deficient policies and procedures” allowed trading desks to disclose their positions and coordinate with traders at other banks to move prices in ways that benefitted Deutsche Bank.

Forex and Volcker Rule Violations Result in Fines

Roughly $137 million of the fine relate to Forex violations, with the other $20 million fine resulting from risky trading in the bank’s proprietary trading account. A bank must follow the Volcker Rule, which is enforced by five federal agencies and established under the 2010 Dodd-Frank Act. The Volcker Rule prohibits U.S. banks from making certain kinds of speculative investments that do not benefit their customers.

The bank also will be required to submit plans and progress reports regarding its compliance with the applicable rules and regulations.

Deutsche Bank’s History of Violations

This isn’t the first time Deutsche Bank has been fined, and it is far from its largest fine: In December, the bank paid $7.2 billion to resolve charges related to its sales of certain mortgage-backed securities before the financial crisis. And earlier this year, the bank paid $425 million to New York state regulators to resolve charges that it failed to properly oversee traders who helped certain Russian individuals avoid capital controls through rigged trades.

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