INTL FCStone Financial

INTL FCStone Financial Inc. nka StoneX Financial Inc. was censured, fined $375,000 due to its supervisory system not being reasonably designed to detect red flags associated with trading or otherwise assess whether its customers were engaged in unlawful trading activity, such as manipulation of microcap securities and/or the sale of unregistered securities.

The findings stated that the firm liquidated low-priced securities for two foreign financial institutions. Some of this trading raised red flags of potential misconduct by the customers engaged in the trading.

The firm’s WSPs did not address manipulation of low-priced securities, did not address the sale of unregistered securities and did not specify how low-priced security trading was to be reviewed, or how any exception reports would be reviewed or applied.

The findings also stated that the firm’s AML program had certain deficiencies in how it tracked (or failed to track) automated clearing house (ACH) transfers, foreign accounts that had common addresses and customers that had previously been blocked by its direct business.

The firm failed to include ACH transactions for its customers into its system monitoring for suspicious activity, defined in its applicable AML procedures as patterns of unusual size, volume, or type of transactions.

In addition, the firm’s system was not initially configured to detect common addresses for its foreign brokerage customers.