WASHINGTON - Interactive Brokers LLC agreed to pay a $700,000 penalty to settle charges by the Commodity Futures Trading Commission that it violated reporting rules and failed to "diligently" supervise the handling of accounts, the agency said on Wednesday.
The CFTC found that the futures broker repeatedly failed to aggregate positions for related accounts that it reported to the CFTC from 2008 through 2012. The Connecticut-based broker also failed to take reasonable steps to correct its automated system after it learned the system was failing to identify and aggregate related accounts.
"The firm cooperated fully with the CFTC during the Commission's investigation and ... has taken steps to improve its large trader reporting," said Caitlin Duffy, a spokeswoman for the privately held, electronic broker.
The settlement comes as the agency faces growing criticism for its oversight of futures brokers after recent revelations of multimillion dollar shortfalls in customers funds at bankrupt brokerages MF Global and Peregrine Financial Group.
In testimony before the House Agriculture Committee on Wednesday, CFTC chairman Gary Gensler said the agency is beefing up enforcement.
"In the last two years, the Division of Enforcement has been filing cases and opening investigations at the highest rate in the CFTC's history," he said.
The firm is the second futures brokerage this year to face a large penalty over lapses in reporting. Newedge USA LLC also paid the CFTC $700,000 in January to settle charges that it submitted inaccurate large trader reports.
Interactive Brokers also paid a $175,000 penalty in 2007 to settle CFTC charges for failing to supervise its compliances staff, according to the agency's website.
(Reporting By Alexandra Alper and Ann Saphir; editing by Gary Hill and Andre Grenon)
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