Scottrade, Inc. has been fined $950,000 for their failure to supervise wiring processes of customer funds to third party accounts. Scottrade has conducted a total of $880 million consisting of over 17,000 third party wire transfers between October 2011 and October 2013. Scottrade was fined for failing to secure customer confirmations for these transfers.
According to the Financial Industry Regulatory Authority (FINRA) Rule 3010, “Each member shall establish and maintain a system to supervise the activities of each registered representative… that is reasonably designed to achieve compliance with applicable securities laws and regulations.” Brokerage firms have an obligation to justly supervise their clients and employees’ actions in order to avoid, detect, and act upon any abnormalities. Those who fail to properly supervise business activities put their clients at risk.