The Financial Industry Regulatory Authority recently entered into a settlement with TradeStation Securities, resolving allegations that the company promoted crypto asset-related services without disclosing that they were not offered through a registered broker-dealer and without providing a fair and balanced presentation of the risks and benefits of the products being promoted.
FINRA Rule 2210 address the standards that FINRA members must comply with when communicating with the public. Among other things, the Rule requires that communications "be based on principles of fair dealing and good faith, must be fair and balanced, and must provide a sound basis for evaluating the facts in regard to any particular security or type of security, industry, or service." The Rule also prohibits the omission of "any material fact or qualification of the omission, in light of the context of the material presented, would cause the communications to be misleading." The Rule also requires that marketing include the name of the broker-dealer and the relationship between the broker-dealer and any non-member who is mentioned.
Here, FINRA charged TradeStation with promoting crypto assets while failing to disclose that they were offered by an affiliate that was not a registered broker-dealer and that was not a member of FINRA or SIPC. For example, the company's website stated, "TradeStation provides award-winning trading and analysis platforms and self-clearing online brokerage services for stocks, ETFs, Equity and index options, commodity and financial futures, futures options, and cryptocurrencies." FINRA alleged, however, that the statement failed to distinguish between the products and services offered by the broker-dealer and those offered by its affiliate.
FINRA also alleged that some of TradeStation's marketing also "discussed crypto assets offered through the affiliate without a balanced description of the associated risks of investing in those assets."
As part of the settlement, TradeStation agreed to a censure and to pay $85,000.
TradeStation Securities, FINRA Letter of Acceptance, Waiver, and Consent, No. 2022076787401 (July 25, 2025).
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
