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 am so blessed to have you and your dynamic team defending me. Your ethics, forward thinking and strategies are amazing.  You guys are the best group of attorneys in the country that I could hire to handle this complicated case.

Cindy C.

LATEST NEWS AND ARTICLES

July 16, 2025
Former CFA Institute Executive Charged in $5 Million Embezzlement Scheme

Michael J. Collins, the former chief marketing officer of the CFA Institute, has been accused of embezzling nearly $5 million from the financial education organization through a long-running fraud scheme designed to fund a lavish personal lifestyle.

July 15, 2025
Former Advisor Sues Prime Capital Again Over Unpaid Equity Redemption

A former San Diego-based advisor has filed a second lawsuit against Prime Capital Financial, alleging breach of contract after the firm failed to honor agreed-upon terms related to his equity buyout.

July 14, 2025
Wisconsin Man Charged in $15.8 Million Ponzi Scheme Disguised as Investment Advisory Business

Federal authorities have charged a Wisconsin man with orchestrating a multimillion-dollar Ponzi scheme that defrauded more than 120 investors over six years.