UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

Interactive Brokers Corp., and 

Interactive Brokers LLC, 

Respondents. 

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CFTC Docket No. 23-56

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND (d) OF THE COMMODITY EXCHANGE ACT, MAKING 

FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I. INTRODUCTION

The Commodity Futures Trading Commission (“Commission”) has reason to believe that 

from at least 2019 to the present (“Relevant Period”), Interactive Brokers Corp. and Interactive 

Brokers LLC (“Interactive Brokers” or “Respondents”) violated, as set forth below, Section 4g 

of the Commodity Exchange Act (“Act”), 7 U.S.C. § 6g, and Commission Regulations 

(“Regulations”) 1.31, 1.35, and 166.3, 17 C.F.R. §§ 1.31, 1.35, 166.3 (2022). Therefore, the 

Commission deems it appropriate and in the public interest that public administrative 

proceedings be, and hereby are, instituted to determine whether Respondents engaged in the 

violations set forth herein and to determine whether any order should be issued imposing 

remedial sanctions. 

In anticipation of the institution of an administrative proceeding, Respondents have 

submitted an Offer of Settlement (“Offer”), which the Commission has determined to accept. 

Respondents admit the facts set forth in Section II below, acknowledge that their conduct 

violated the Act and Regulations and consent to the entry of this Order Instituting Proceedings 

Pursuant to Section 6(c) and (d) of the Commodity Exchange Act, Making Findings, and 

Imposing Remedial Sanctions (“Order”), and acknowledge service of this Order.1

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 Respondents agree that the findings of fact and conclusions of law in this Order shall be taken as true and correct 

and be given preclusive effect without further proof in this proceeding and any other proceeding brought by the 

Commission or to which the Commission is a party or claimant, including but not limited to, a proceeding in 

bankruptcy or receivership. Respondents do not consent to the use of the Offer or this Order, or the findings or 

conclusions in this Order, by any other party in any other proceeding.
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II. FINDINGS 

The Commission finds the following: 

A. SUMMARY 

 The Act and Regulations impose recordkeeping and supervision requirements on 

Commission registrants to ensure that they responsibly discharge their crucial role in our markets. 

Compliance with these requirements is essential to the Commission’s efforts to promote the 

integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation. 

During the Relevant Period, Interactive Brokers employees, including those at senior levels, 

communicated both internally and externally using unapproved methods, including via personal text 

messages and WhatsApp messages. These written communications were sent and received by 

Interactive Brokers employees and included messages related to Interactive Brokers’ businesses as 

Commission registrants that were required to be maintained under Commission-mandated 

recordkeeping requirements. These written communications via unapproved methods generally 

were not maintained and preserved by Interactive Brokers, and Interactive Brokers generally would 

not have been able to furnish the communications promptly to a Commission representative if and 

when requested. As a result, Interactive Brokers violated, as set forth below, Section 4g of the Act, 

7 U.S.C. § 6g, and Regulations 1.31 and 1.35, 17 C.F.R. §§ 1.31, 1.35 (2022). 

 In addition, the widespread use of unauthorized communication methods by Interactive 

Brokers’ employees to conduct firm business violated Interactive Brokers’ own policies and 

procedures, which prohibited such communications. Interactive Brokers did not maintain 

adequate internal controls with respect to the use of unapproved communication methods for 

business-related communications. Indeed, some of the very same supervisory personnel at 

Interactive Brokers responsible for ensuring compliance with Interactive Brokers’ policies and 

procedures themselves utilized unapproved methods of communication to engage in businessrelated communications, in violation of firm policy. Because Interactive Brokers failed to 

implement a diligent supervisory system to ensure compliance with Commission recordkeeping 

requirements and the firm’s own policies and procedures, and because the widespread use of 

unauthorized communication methods resulted in the firm’s failure to maintain Commissionrequired records, Interactive Brokers failed to diligently supervise matters related to its business 

as a Commission registrant in violation of Regulation 166.3, 17 C.F.R. § 166.3 (2022), as set 

forth below. 

B. RESPONDENTS 

Interactive Brokers Corp. is a financial services institution with its main office in 

Greenwich, Connecticut. Interactive Brokers Corp. has been registered with the Commission as 

an Introducing Broker (“IB”) since May 27, 2008. 

Interactive Brokers LLC is a financial services institution with its main office in 

Greenwich, Connecticut. Interactive Brokers LLC has been registered with the Commissions as 

a Futures Commission Merchant (“FCM”) since December 2, 1994. 
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C. FACTS 

In connection with the Commission’s investigation, Interactive Brokers disclosed that it 

conducted a review of the use of unapproved communications methods by its employees. That 

review demonstrated that there was widespread and longstanding use of unapproved 

communication methods by employees—including senior-level employees—to engage in firm 

business. 

Importantly, during the Relevant Period, Interactive Brokers’ policies and procedures 

broadly prohibited employees from using unapproved communication methods, such as personal 

text messages and WhatsApp, to engage in business-related communications. 

Messages sent through Interactive Brokers-approved communications methods were 

monitored, subject to review, and when appropriate, archived. By contrast, messages sent using 

unapproved communication methods, including over personal WhatsApp and text messages, 

were generally not monitored, subject to review, or archived. 

As a result of Interactive Brokers’ failure to ensure that its employees—including 

supervisors and senior-level employees—complied with the firm’s communications policies and 

procedures, Interactive Brokers failed to maintain hundreds if not thousands of business-related 

communications, including communications in connection with its commodities business, and 

thus failed diligently to supervise its businesses as Commission registrants. These supervision 

failures resulted in the widespread use of unapproved methods of communication by many 

Interactive Brokers employees in violation of the firm’s policies and procedures, as well as a 

widespread failure to maintain certain records required to be maintained pursuant to Commission 

recordkeeping requirements. 

A sampling analysis, for example, of the personal devices of ten Interactive Brokers 

employees, including three associated persons of Interactive Brokers’ CFTC-registered 

businesses, illustrates the breadth of Interactive Brokers’ supervision and recordkeeping failures. 

Of those ten employees, which included numerous senior-level employees, all had violated 

Interactive Brokers’ communications policies and procedures by using personal text message and 

other unapproved methods to communicate with coworkers and market participants. Further, 

those employees’ communications revealed that numerous more Interactive Brokers employees 

(including numerous managers and senior supervisors) conducted firm business via unapproved 

methods (including in text and WhatsApp messages). 

The Commission’s investigation concluded that certain of the communications by 

Interactive Brokers employees using unapproved communication methods constituted records 

that were required to be kept pursuant to Commission recordkeeping requirements, but were not 

preserved and maintained by Interactive Brokers. 

Interactive Brokers’ recordkeeping and supervision failures were firm-wide and involved 

employees at all levels of authority. Moreover, employees’ use of unapproved communication 

methods was not hidden within the firm. To the contrary, certain supervisors—the very people 

responsible for supervising employees to prevent this misconduct—communicated using 

unapproved methods on their personal devices. In fact, senior supervisors responsible for 
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implementing Interactive Brokers’ policies and procedures, and for overseeing employees’ 

compliance with those policies and procedures, themselves failed to comply with firm policies 

by communicating using unapproved methods on their personal devices about the firm’s 

Commission-regulated businesses. 

III. LEGAL DISCUSSION 

A. Interactive Brokers’ Failure to Keep Required Records in Violation of 

Section 4g of the Act and Regulation 1.35 

Section 4g of the Act requires FCMs, IBs, and other registrants to create and keep books 

and records pertaining to transactions and positions in such form and manner and for such period 

as may be required by the Commission. 7 U.S.C. § 6g. Regulation 1.35(a)(1), 17 C.F.R. 

§ 1.35(a)(1) (2022), sets forth some of the books and records that are required to be created and 

maintained by FCMs and certain IBs.2

 Specifically, an FCM or IB must: 

(i) Keep full, complete, and systematic records . . . of all transactions relating to 

its business of dealing in commodity interests . . . which shall include all orders 

(filled, unfilled, or canceled), . . . and all other records, which have been prepared 

in the course of its business of dealing in commodity interests . . . . 

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(iii) Keep all oral and written communications provided or received concerning 

quotes, solicitations, bids, offers, instructions, trading, and prices that lead to the 

execution of a transaction in a commodity interest . . . whether transmitted by 

telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, 

mobile device, or other digital or electronic media . . . . 

With the exception of pre-trade communications, all such records are required to be “kept in a 

form and manner that allows for the identification of a particular transaction.” Regulation 

1.35(a)(5), 17 C.F.R. § 1.35(a)(5) (2022). 

As a result of the widespread use of unapproved methods of communication by firm 

employees, which communications were not preserved and maintained, Interactive Brokers 

failed to keep full, complete, and systematic records of all transactions relating to its business of 

dealing in commodity interests, in violation of Section 4g of the Act and Regulation 1.35.

B. Interactive Brokers’ Failure to Keep Records in Required Manner in 

Violation of Regulation 1.31 

Regulation 1.31(b)(4), 17 C.F.R. § 1.31(b)(4) (2022), requires that registrants keep all 

books and records that are required to be maintained under the Act and Regulations in such 

manner as to make them “readily accessible” for a period of two years for paper records and for 

 

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 IBs not subject to Regulation 1.35(a)(1) are subject instead to the recordkeeping requirements of either Regulation 

1.35(a)(2) or (3). 
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the duration of the retention period for electronic records. Upon request of the Commission, all 

of these documents are required to be “promptly” produced. Regulation 1.31(d), 17 C.F.R. 

§ 1.31(d) (2022). 

By failing to keep all Commission-required records in such a manner as to make them 

“readily accessible,” Interactive Brokers violated Regulation 1.31. 

C. Interactive Brokers’ Failure to Diligently Supervise in Violation of 

Regulation 166.3 

Regulation 166.3 states: 

Each Commission registrant, except an associated person who has no supervisory 

duties, must diligently supervise the handling by its partners, officers, employees 

and agents (or persons occupying a similar status or performing a similar 

function) of all commodity interest accounts carried, operated, advised or 

introduced by the registrant and all other activities of its partners, officers, 

employees and agents (or persons occupying a similar status or performing a 

similar function) relating to its business as a Commission registrant. 

17 C.F.R. § 166.3 (2022). 

A violation under Regulation 166.3 is an independent violation for which no underlying 

violation is necessary. See In re Collins, CFTC No, 94-13, 1997 WL 761927, at *10 (Dec. 10, 

1997). A violation of Regulation 166.3 is demonstrated by showing either that: (1) the 

registrant’s supervisory system was generally inadequate; or (2) the registrant failed to perform 

its supervisory duties diligently. In re Murlas Commodities, Inc., CFTC No. 85-29, 1995 WL 

523563, at *9 (Sept. 1, 1995); Sansom Refining Co. v. Drexel Burnham Lambert, Inc., CFTC No. 

82-R448, 1990 WL 282783, at *11 (Feb. 16, 1990) (noting that, under Regulation 166.3, 

registrants have a “duty to develop procedures for the detection and deterrence of possible 

wrongdoing by [their] agents” (internal quotation omitted)); In re GNP Commodities, Inc., CFTC 

No. 89-1, 1992 WL 201158, at *17–19 (Aug. 11, 1992) (providing that, even if an adequate 

supervisory system is in place, Regulation 166.3 can still be violated if the supervisory system is 

not diligently administered); see also In re Rosenthal Collins Grp., LLC, CFTC No. 12-18, 2012 

WL 1242406, at *6 (Apr. 12, 2012) (consent order) (respondent failed to perform supervisory 

duties diligently by not following its compliance procedures that were in place). Evidence of 

violations that “should be detected by a diligent system of supervision, either because of the 

nature of the violations or because the violations have occurred repeatedly” is probative of a 

failure to diligently supervise. In re Paragon Futures Assoc., CFTC No. 88-18, 1992 WL 74261, 

at *14 (Apr. 1, 1992) (“The focus of any proceeding to determine whether Rule 166.3 has been 

violated will be on whether [a] review [has] occurred and, if it did, whether it was ‘diligent.’”). 

Interactive Brokers failed diligently to supervise its business as a Commission registrant by 

failing to maintain adequate supervisory systems to ensure that employees complied with 

Interactive Brokers’ Commission recordkeeping requirements and firm policies and procedures that 

prohibited business-related communications on unapproved methods of communication. The 
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inadequacy of Interactive Brokers’ supervisory systems is demonstrated by the longstanding and 

repeated violations of Interactive Brokers’ Commission recordkeeping obligations and firm policies 

and procedures and the fact that the supervisory failures resulted in the repeated failure to maintain 

Commission-required records, to ensure that the required records were readily accessible, and that 

the records could be promptly produced upon request. By this conduct, Interactive Brokers failed 

to supervise diligently its officers, employees, and agents in violation of Regulation 166.3. 

IV. FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that, during the Relevant Period, 

Interactive Brokers violated Section 4g of the Act, 7 U.S.C. § 6g, and Regulations 1.31, 1.35, 

and 166.3, 17 C.F.R. §§ 1.31, 1.35, 166.3 (2022). 

V. OFFER OF SETTLEMENT 

Respondents have submitted the Offer in which they: 

A. Acknowledge service of this Order; 

B. Admit the facts described in Section II above and acknowledge that their conduct 

violated the Act and Regulations; 

C. Admit the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

D. Waive: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

4. Judicial review by any court; 

5. Any and all objections to the participation by any member of the Commission’s 

staff in the Commission’s consideration of the Offer; 

6. Any and all claims that they may possess under the Equal Access to Justice Act, 

5 U.S.C. § 504, and 28 U.S.C. § 2412, and/or the rules promulgated by the 

Commission in conformity therewith, Part 148 of the Regulations, 17 C.F.R. 

pt. 148 (2022), relating to, or arising from, this proceeding; 

7. Any and all claims that they may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, §§ 201–253, 110 

Stat. 847, 857–74 (codified as amended at 28 U.S.C. § 2412 and in scattered sections 

of 5 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; and 
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8. Any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief, including this Order; 

E. Agree for purposes of the waiver of any and all rights under the Equal Access to Justice 

Act and the Small Business Regulatory Enforcement Fairness Act of 1996, specified in 

paragraphs 6 and 7 above, that the Commission is the prevailing party in this action; 

F. Stipulate that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Respondents have consented in the Offer; 

G. Consent, solely on the basis of the Offer, to the Commission’s entry of this Order that: 

1. Makes findings by the Commission that Interactive Brokers violated Section 4g of 

the Act, 7 U.S.C. § 6g, and Regulations 1.31, 1.35, and 166.3, 17 C.F.R. §§ 1.31, 

1.35, 166.3 (2022); 

2. Orders Interactive Brokers to cease and desist from violating Section 4g of the Act, 

7 U.S.C. § 6g, and Regulations 1.31, 1.35, and 166.3, 17 C.F.R. §§ 1.31, 1.35, 

166.3 (2022); 

3. Orders Respondents to pay, jointly and severally, a civil monetary penalty in the 

amount of twenty million US dollars ($20,000,000), plus post-judgment interest 

within fourteen days of the date of entry of this Order; and 

4. Orders Respondents and their successors and assigns to comply with the conditions 

and undertakings consented to in the Offer and as set forth in Part VI of this Order; 

and 

H. Represent that Respondents have engaged in a review of certain recordkeeping failures 

and begun a program of remediation. 

Upon consideration, the Commission has determined to accept the Offer. 

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. Interactive Brokers and its successors and assigns shall cease and desist from violating 

Section 4g of the Act, 7 U.S.C. § 6g, and Regulations 1.31, 1.35, and 166.3, 17 C.F.R. 

§§ 1.31, 1.35, 166.3 (2022). 

B. Respondents shall pay, jointly and severally, a civil monetary penalty in the amount of 

twenty million US dollars ($20,000,000) (“CMP Obligation”), within fourteen days of the 

date of the entry of this Order. If the CMP Obligation is not paid in full within fourteen 

days of the date of entry of this Order, then post-judgment interest shall accrue on the 

CMP Obligation beginning on the date of entry of this Order and shall be determined by 
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using the Treasury Bill rate prevailing on the date of entry of this Order pursuant to 

28 U.S.C. § 1961. 

Respondents shall pay the CMP Obligation and any post-judgment interest by electronic 

funds transfer, U.S. postal money order, certified check, bank cashier’s check, or bank 

money order. If payment is to be made other than by electronic funds transfer, then the 

payment shall be made payable to the Commodity Futures Trading Commission and sent 

to the address below:

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 

6500 S. MacArthur Blvd. 

HQ Room 266 

Oklahoma City, OK 73169 

9-AMC-AR-CFTC@faa.gov 

 If payment is to be made by electronic funds transfer, Interactive Brokers shall contact 

Tonia King or her successor at the above email address to receive payment instructions 

and shall fully comply with those instructions. Respondents shall accompany payment of 

the CMP Obligation with a cover letter that identifies the paying Respondent(s) and the 

name and docket number of this proceeding. The paying Respondent(s) shall 

simultaneously transmit copies of the cover letter and the form of payment to the Chief 

Financial Officer, Commodity Futures Trading Commission, Three Lafayette Centre, 

1155 21st Street, NW, Washington, D.C. 20581; 

C. Respondents and their successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer: 

1. Interactive Brokers shall conduct, within 150 days of the entry of this Order: 

a. A comprehensive review of Interactive Brokers’ supervisory, compliance, and 

other policies and procedures designed to ensure that Interactive Brokers’ 

electronic communications, including those found on personal electronic 

devices, including without limitation, cellular phones (“Personal Devices”), 

are preserved in accordance with the requirements of the Act, the Regulations, 

and Interactive Brokers’ policies and procedures. 

b. A comprehensive review of training conducted by Interactive Brokers to 

ensure FCM and IB personnel are complying with the requirements regarding 

the preservation of electronic communications, including those found on 

Personal Devices, in accordance with the requirements of the Act and the 

Regulations, and Interactive Brokers’ policies and procedures, including by 

ensuring that Interactive Brokers FCM and IB personnel certify in writing on 

a quarterly basis that they are complying with preservation requirements. 

c. An assessment of the surveillance program measures implemented by 

Interactive Brokers to ensure compliance, on an ongoing basis, with the 
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requirements found in the Act, the Regulations, and Interactive Brokers’ FCM 

and IB policies and procedures to preserve electronic communications, 

including those found on Personal Devices. 

d. An assessment of the technological solutions that Interactive Brokers has 

begun implementing to meet the record retention requirements of the Act, the 

Regulations, and Interactive Brokers’ policies and procedures, including an 

assessment of the likelihood that Interactive Brokers FCM and IB personnel 

will use the technological solutions going forward and a review of the 

measures employed by Interactive Brokers to track employee usage of new 

technological solutions. 

e. An assessment of the measures used by Interactive Brokers to prevent the use 

of unauthorized communications methods for business communications by 

FCM and IB personnel. This assessment should include, but not be limited to, 

a review of the firm’s policies and procedures to ascertain if they provide for 

any significant technology and/or behavioral restrictions that help prevent the 

risk of the use of unapproved communications methods on Personal Devices 

(e.g., trading floor restrictions). 

f. A review of Interactive Brokers’ electronic communications surveillance 

routines to ensure that electronic communications through approved 

communications methods found on Personal Devices are incorporated into 

Interactive Brokers’ overall FCM and IB communications surveillance 

program. 

g. A comprehensive review of the framework adopted by Interactive Brokers to 

address instances of non-compliance by Interactive Brokers FCM and IB 

employees with Interactive Brokers’ policies and procedures concerning the 

use of Personal Devices to communicate about Interactive Brokers business in 

the past. This review shall include a survey of how Interactive Brokers 

determined which employees failed to comply with Interactive Brokers 

policies and procedures, the corrective action carried out, an evaluation of 

who violated policies and why, what penalties were imposed, and whether 

penalties were handed out consistently across business lines and seniority 

levels. 

2. Written Report of Findings: 

a. Within forty-five (45) days after completion of the review set forth in subparagraphs 1.a. through 1.g. above, Interactive Brokers shall submit a detailed 

written report of its findings to the Commission staff (the “Report”). The 

Report shall include a description of the review performed, the names of the 

individuals who performed the review, the conclusions reached, and a 

summary of the plan for implementing the recommended changes in or 

improvements to Interactive Brokers’ policies and procedures. 
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b. Interactive Brokers shall adopt all recommendations contained in the Report 

within one hundred and thirty-five (135) days of the date of the Report. 

c. The Report will likely include confidential financial, proprietary, competitive 

business or commercial information. Public disclosure of the reports could 

discourage cooperation, impede pending or potential government 

investigations or undermine the objectives of the reporting requirement. For 

these reasons, among others, the reports and the contents thereof are intended 

to remain and shall remain non-public, except: (1) pursuant to court order; 

(2) as agreed to by the parties in writing; (3) to the extent that the Commission 

determines in its sole discretion that disclosure would be in furtherance of the 

Commission’s discharge of its duties and responsibilities; or (4) is otherwise 

required by law. 

3. One-Year Evaluation: Interactive Brokers shall assess its program for the 

preservation, as required under the Act, Regulations, and Interactive Brokers’ policies 

and procedures, of electronic communications, including those found on Personal 

Devices, commencing one year after submitting the Report required by Paragraph 2.a 

above. Interactive Brokers shall require this review to evaluate Interactive Brokers’ 

progress in the areas described in Paragraph 1.a. through 1.g. above. After this 

review, Interactive Brokers shall submit a report (the “One Year Report”) to the 

Commission staff and shall ensure that the One Year Report includes an updated 

assessment of Interactive Brokers’ policies and procedures with regard to the 

preservation of electronic communications (including those found on Personal 

Devices), training, surveillance programs, and technological solutions implemented in 

the prior year period. 

4. Reporting Discipline Imposed: For two years following the entry of this Order, 

Interactive Brokers shall notify the Commission staff as follows upon the imposition 

of any discipline imposed by Interactive Brokers, including, but not limited to, 

written warnings, loss of any pay, bonus, or incentive compensation, or the 

termination of employment, with respect to any FCM and IB personnel found to have 

violated Interactive Brokers’ policies and procedures concerning the preservation of 

electronic communications, including those found on Personal Devices: (1) at least 

48 hours before the filing of a Form 8-T; or (2) within ten (10) days of the imposition 

of other discipline. 

5. Recordkeeping: Interactive Brokers shall preserve, for a period of not less than six 

(6) years from the end of the fiscal year last used, the first two (2) years in an easily 

accessible place, any record of compliance with these undertakings. 

6. Public Statements: Respondents agree that neither they nor any of their successors 

and assigns, agents or employees under their authority or control shall take any action 

or make any public statement denying, directly or indirectly, any findings or 

conclusions in this Order or creating, or tending to create, the impression that this 

Order is without a factual basis; provided, however, that nothing in this provision