optionsXpress has been a FINRA firm since August 2000. The firm is primarily an online broker-dealer that specializes in providing customers an online platform to trade options.
FINRA found that under the terms of the firm’s Agreement with GBT coaches were prohibited from advising clients in live trading situations. The agreement provided that GBT coaches are vigorously trained on the absolute prohibition of making buy/sell recommendations to students. However, FINRA found that in implementing the coaching program, GBT’s coaches did not uniformly adhere to this prohibition and in certain instances coaches discussed live trades, specific transactions, or strategies that the customer was considering executing. Even though coaching sessions were prefaced with the disclaimer that coaches were not permitted to make buy, sell, or hold recommendations, FINRA determined that in certain sessions, the “coaching” surpassed mere discussions of specific securities transactions, and rose to the level of buy, sell, or hold recommendations.
The Agreement between optionsExpress and GBT also required prior written approval from optionsXpress before using marketing scripts and coaching materials, discretion and control over the hiring and termination of coaches and staff, and the right to monitor the coaching calls FINRA found that notwithstanding the contract the firm neither adopted nor implemented any policies or procedures to supervise its employees in their review and approval of the marketing scripts used by GBT or to ensure that its employees monitored GBT personnel’s interactions with customers.
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