FINRA Fines TradeStation Securities Over Deficient Crypto Communications
From the desk of Jim Eccleston at Eccleston Law
FINRA has fined TradeStation Securities Inc. $85,000 for violations related to retail communications about crypto assets and crypto asset-related services. According to InvestmentNews, the penalty follows a three-year FINRA inquiry into how certain broker-dealers communicate with retail customers about digital assets.
In its Acceptance, Waiver and Consent (AWC), TradeStation Securities agreed to FINRA’s findings without admitting or denying them. According to FINRA, the firm’s communications often failed to clearly disclose that crypto assets were not offered by TradeStation Securities itself, but rather through an affiliate that was not a registered broker-dealer. The materials also did not adequately describe the risks of investing in volatile crypto assets.
InvestmentNews reports that the enforcement action is part of FINRA’s broader review of crypto-related communications. A 2022 targeted examination of 500 firm communications found that 70 percent contained potential rule violations. In May 2024, FINRA fined Firstrade Securities the same amount for similar conduct.
Under FINRA rules, broker-dealer communications must be fair, balanced, and not misleading, providing investors with a sound basis for evaluating a product or service. The regulator prohibits false, exaggerated, or incomplete claims, particularly in high-risk areas like crypto assets.
According to InvestmentNews, industry compliance experts have warned that while broker-dealers cannot sell unregistered crypto assets directly, they may offer SEC-approved products such as Bitcoin exchange-traded funds. FINRA’s findings underscore that firms must still ensure all communications comply with strict disclosure and risk presentation standards.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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