FINRA Fines Altruist Financial $150,000 for Supervisory Failures in Securities Lending Program

Altruist Financial LLC has agreed to pay a $150,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA) over alleged rule violations involving its fully paid securities lending business.

From March 2020 to April 2023, FINRA found that Altruist failed to reasonably supervise the securities lending program offered by its clearing firm, which enrolled more than 30,000 of the firms customers. The investigation revealed that Altruist had no effective system in place to oversee this business, including critical processes such as customer enrollment.

FINRA also noted that Altruist provided participating customers with a lending agreement containing inaccurate representations. The agreement stated that customers would receive loan fees for their borrowed shares and that Altruist would reduce management fees for participants—claims that were not supported by the firms practices.

As a result, Altruist was found to have violated FINRA Rules 3110 (Supervision), 2210(d)(1)(B) (Communications with the Public), and 2010 (Standards of Commercial Honor and Principles of Trade).

Under the settlement, Altruist has agreed to a censure, the $150,000 fine, and restitution of $142,851.22, plus interest, to affected customers.

Altruist Financial, headquartered in Dallas, Texas, became a FINRA member in 2019. The firm operates thirteen branch offices and employs approximately 100 registered representatives. Until April 2023, Altruist functioned as an introducing broker-dealer facilitating securities transactions in equities, ETFs, and mutual funds. Since April 2023, the firm has operated as a self-clearing broker-dealer.