SpeedTrader, Inc., formerly known as Mint Global Markets, Inc., has reached a settlement with the Financial Industry Regulatory Authority (FINRA).
From at least November 2017 to the present, SpeedTrader failed to comply with its best execution obligations. Before June 2023, the firm’s reviews of execution quality were limited to assessing whether customers’ trades were executed at prices inferior to the National Best Bid and Offer (NBBO). After June 2023, SpeedTrader did not consider all relevant execution quality factors, such as the likelihood of execution of limit orders, transaction costs, customer needs and expectations, and the existence of payment for order flow arrangements.
Additionally, from at least November 2017 to the present, SpeedTrader’s reviews failed to compare the execution quality of the firm’s existing order routing arrangements to the execution quality of other markets.
As a result, SpeedTrader violated FINRA Rule 5310(a)(1), FINRA Rule 5310 Supplementary Material .09 (Rule 5310.09), and FINRA Rule 2010.
Further, from January 2017 to July 2022, SpeedTrader routed customer orders totalling approximately 100 million shares annually to three other broker-dealers that engaged in net trading activity, and thereby interjected these three broker-dealers between itself and the best market for the subject securities in violation of FINRA Rules 5310(a)(2) and 2010.
Furthermore, by failing to reasonably review this net trading activity to ensure that it did not interfere with the firm’s best execution obligations, SpeedTrader separately violated FINRA Rules 5310(a)(1), 5310.09, and 2010.
From at least November 2017 to the present, SpeedTrader also violated FINRA Rules 3110 and 2010 by failing to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with its best execution obligations.
From January 2017 through February 2022, SpeedTrader violated Rule 606 of Regulation NMS under the Securities Exchange Act of 1934 and FINRA Rule 2010 by failing to disclose material aspects of its relationship with markets to which it routed orders in its quarterly reports made available pursuant to Exchange Act Rule 606.
From at least November 2017 to at least March 2022, SpeedTrader failed to establish and implement a written anti-money laundering (AML) program that was reasonably designed to achieve and monitor the firm’s compliance with the requirements of the Bank Secrecy Act (BSA) and its implementing regulations. Specifically, SpeedTrader failed to establish and implement policies and procedures that could be reasonably expected to detect and cause the reporting of suspicious activity, in violation of FINRA Rules 3310(a), 3310(f), and 2010.
Additionally, from June 30, 2020 to August 22, 2023, SpeedTrader falsely responded “No” to the question on the firm’s customer relationship summary (Form CRS) concerning legal or disciplinary history. The firm was required to respond “Yes,” because it had prior legal or disciplinary history. By filing and delivering to customers its Form CRS containing inaccurate information, the firm willfully violated Exchange Act § 17(a)(1) and Exchange Act Rule 17a-14, and violated FINRA Rule 2010.
The firm has agreed to a censure.
In determining the appropriate sanctions in this matter, FINRA considered, among other factors, SpeedTrader’s current financial condition and that, in lieu of a monetary fine, SpeedTrader will retain an independent consultant to review and revise the firm’s supervisory system and procedures governing its best execution and AML obligations.
