DD Support Board and Research Team

[1manband]

Finally. FINRA is punishing brokerages for allowing pretty much anybody and everybody to trade options and ignoring the suitability requirements.

This one is a doozy. Fidelity was censured and fined $900,000 for their failures in allowing unsuitable people to trade options. Fidelity approved people based on only their claims made on the option application. They didn't check that application against their other documentation, or their actual account data, or against previous applications. If Fidelity actually rejected someone, all they had to do was make another application and change the numbers. Fidelity did not consider if a customer had submitted multiple applications, which is pretty much a sure sign they are lying on the most recent application. They just ignored the prior ones, so anyone who wanted to trade options just had to keep fudging their numbers until they got it approved. No consequences.

And the one that really gets me is that Fidelity required a customer to have 1 year of investment experience to trade options. But, their system only considered experience after a person was 18. So, if a person was under 19 but claimed on their application that they had the year's experience, they were approved, even though they couldn't have and it was clearly a lie. As I have said here before, Fidelity was well known in the trader community for approving unsophisticated and broke 18 year olds for option trading, no questions asked. Now we know why.

https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2021071987001