The U.S. FINRA fines E*Trade $350,000 for flaws in its surveillance systems. Of the $350,000 fine, $144,500 will go to FINRA, and the rest to Nasdaq, NYSE, Investors Exchange, and Cboe EDGX Exchange for similar violations, the FINRA filing said. Between February 2016 and November 2021 E*Trade relied on automated surveillance reports to detect manipulative trading by customers. However, with regard to wash trades, prearranged trading, and marking-the-close, the reporting parameters were flawed enough to be inadequate.
E*Trade, a subsidiary of Morgan Stanley, already agreed to the settlement with the U.S. Financial Industry Regulatory Authority (FINRA). The self-regulatory agency alleged multiple violations. So it failed to detect manipulative trading due to the lapses in the supervisory systems. Discovery of the non-compliance originated from reviews conducted by Finra’s Market Regulation Department, the filing said.
