Finra Orders 4 Firms to Pay Combined $2.6 Million Over Securities Lending

By Dean Seal

The Financial Industry Regulatory Authority has ordered four firms, including the brokerage wing of SoFi Technologies, to pay a combined $2.6 million for alleged shortcomings in the supervision of their securities lending offerings.

The broker-dealer regulator said Wednesday that SoFi Securities, M1 Finance, Open to the Public Investing and SogoTrade failed to establish any criteria for customer participation in their fully paid securities lending programs, in which a clearing firm borrows a customer's fully paid or excess margin securities and lends them to a third party for a fee.

Instead, the firms enrolled all new customers in fully paid securities lending and provided them with misleading disclosure documents about the compensation they would receive, when no compensation was actually paid out, according to Finra.

Without admitting or denying the allegations, the firms have agreed to pay $1 million in restitution to customers and $1.6 million in fines to resolve the matter.

The restitution will be paid to customers whose securities were lent out over a dividend date and faced adverse tax consequences as a result.

Write to Dean Seal at [e-mail]

(END) Dow Jones Newswires

December 06, 2023 10:41 ET (15:41 GMT)

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