Massachusetts securities regulators have charged Fidelity Brokerage Services with unethical and dishonest conduct and practices in the securities business over its rubber-stamping of options trading applications.
Citing the company’s “half-hearted and lackadaisical attitude” toward safeguarding retail investors, the state’s securities division charged Fidelity with “failure to properly vet customers who applied to be approved for options and margin trading.”
Regulators said that Fidelity’s application review system allowed customers to submit multiple applications, each time with the information altered until the customers met the requirements to be approved.
The administrative complaint, filed by Secretary of the Commonwealth William F. Galvin's securities division, details examples of repeated applications – in some instances as many as 13 in one month – with inflated financials, investment experience and employment information that Fidelity reviewers failed to notice, despite having contrary information already in the firm’s system.
The state is seeking to censure Fidelity, require it to retain an independent compliance consultant to remedy the conditions, and impose an administrative fine that a hearing officer will determine at a future date.
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