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

Fantastic news!!!!  Your professionalism, support and expertise were greatly appreciated.  You made a difficult situation much more bearable.

Marci M.

LATEST NEWS AND ARTICLES

October 23, 2025
Retail Access to Private Markets Raises Investor Protection and Regulatory Concerns

Robinhood Markets recently registered its first alternative investment vehicle, Robinhood Ventures Fund I, with the Securities and Exchange Commission (SEC).

October 21, 2025
Judge Denies Merrill Lynch's TRO in Advisor Transition

A federal judge has rejected Merrill Lynch’s request for a temporary restraining order (TRO) against a group of former financial advisors who left the firm to launch their own independent practice, OpenArc Corporate Advisory, under Dynasty Financial Partners’ platform with custody at Charles Schwab.

October 20, 2025
FINRA Accuses Former MML Broker of Cheating on SIE Exam

Regulators have accused a former MML Investors Services-affiliated broker of cheating on the Securities Industry Essentials (SIE) exam, according to a recent Financial Industry Regulatory Authority (FINRA) enforcement complaint.