“TD Ameritrade used a primarily automated course of for systematic approval or denial of buyer choices account functions,” the order states. “Pursuant to that course of, the agency might approve a buyer for the very best degree of choices buying and selling authority a buyer certified for based mostly on the agency’s eligibility standards and the knowledge submitted by the client, together with earnings, internet price, and years of choices buying and selling expertise.”
In the course of the related interval, TD Ameritrade’s programs “routinely in contrast info offered on an choices software with info beforehand offered by the client in an accepted choices software submitted previously 60 days,” the order states.
Nevertheless, previous to October 2022, the agency’s system “didn’t detect when the knowledge equipped by a buyer in a brand new choices buying and selling software materially differed from info the client had beforehand offered to the fnm in prior rejected functions or in functions accepted by the agency greater than 60 days earlier than the brand new software,” FINRA mentioned.
Ignored Pink Flags
TD Ameritrade accepted prospects for sure ranges of choices buying and selling “regardless of crimson flags that the requested degree of choices buying and selling was not acceptable for them,” the order states.
Between November 2019 and October 2022, TD Ameritrade accepted sure prospects to commerce choices “whose functions contained info that was materially inconsistent with different info those self same prospects had offered to the agency in prior functions,” FINRA mentioned. “These prospects’ functions contained crimson flags {that a} greater degree of choices buying and selling could not have been acceptable.”
Throughout this era, the agency “accepted greater than 1,288 prospects for Full/Superior choices buying and selling — which required prospects to have three or extra years of choices buying and selling expertise pursuant to the agency’s eligibility standards — regardless of earlier statements from these prospects in functions submitted inside the prior six months that they’d lower than one yr of expertise,” the order explains.
Particularly, the agency ”accepted greater than 496 prospects who claimed they’d greater than six years of choices buying and selling expertise regardless of earlier functions from these prospects submitted within the prior six months that acknowledged these prospects had lower than one yr of expertise,” FINRA mentioned.