FINRA Reminds Firm To Monitor For “Red Flags” In Options Trading Applications

Posted on December 9th, 2022 at 12:16 PM
FINRA Reminds Firm To Monitor For “Red Flags” In Options Trading Applications

From the Desk of Jim Eccleston at Eccleston Law.

The Financial Industry Regulatory Authority (FINRA) has released an announcement reminding firms that recommend options trading for clients to be constantly monitoring for “red flags” on customer applications.

FINRA published an update regarding its targeted sweep of firms’ supervision of options trading and strategies, which was initiated in August 2021. During the sweep, FINRA has asked firms to consider whether they had established a “minimum criteria” for options trading applications, including whether the client’s investment objectives match their desired levels of options trading. FINRA additionally has recommended that firms compare information provided on account applications to the information already collected by the firm and also to check for inconsistencies on the applications themselves.

Furthermore, FINRA has reminded firms to review their automated systems to ensure that they are capable of adequately highlighting red flags. First also must make certain that any options trading recommendations adhere to Regulation Best Interest (Reg BI). Finally, FINRA notes that firms ought to “conduct periodic, ongoing” reviews of trading activity when supervising accounts to ensure clients still are eligible for options trading or whether a client’s account should be downgraded or determined to be ineligible.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, finra

Return to Archive

TESTIMONIALS

Previous
Next

I just received this letter from the CFP Board. Thank you, Thank you, THANK YOU!

David Y

LATEST NEWS AND ARTICLES

September 5, 2025
Merrill Lynch Advisor Faces FINRA Disciplinary Action for Refusing to Cooperate with Investigation

The Financial Industry Regulatory Authority (FINRA) has initiated disciplinary proceedings against former Merrill Lynch broker Ali F. Chehab of Portland, Oregon. According to ThinkAdvisor, FINRA alleges that he refused to cooperate in an investigation into potential misconduct, including unauthorized trading and material misrepresentati...

September 4, 2025
Wells Fargo Ties $2,000 Bonus to Non-Solicitation Clause, Raising Advisor Concerns

Wells Fargo & Co. recently issued a $2,000 bank-wide award to its 215,000 employees, following the Federal Reserve’s June decision to lift its asset growth restrictions.

September 3, 2025
Kansas City Advisory Firms Agree to $25.5 Million Settlement Over No-Poach Allegations

Mariner Wealth Advisors, along with two other Kansas City-area firms, has agreed to a $25.5 million class action settlement over allegations that they illegally agreed not to solicit each other’s advisors.