“Apex failed on all of those counts — it lacked reasonable grounds to think the program was appropriate for participating customers who did not receive a loan fee for their loans, distributed documents that misrepresented that customers would receive compensation (they did not), and failed to provide certain customers with required written disclosures,” FINRA stated.
Additionally, between January 2019 and June 2023, Apex failed to deliver all necessary written disclosures outlining customers’ rights as program participants. The firm also lacked the written policies and procedures necessary to ensure compliance with regulatory requirements, according to FINRA.
Wider Regulatory Scrutiny of Securities Lending Practices
The enforcement action against Apex Clearing follows FINRA’s prior crackdown on four introducing broker-dealers—M1 Finance LLC, Open to the Public Investing Inc., SoFi Securities LLC, and SogoTrade Inc.—for supervisory and advertising violations tied to Apex’s securities lending program. In that matter, the firms agreed to a combined $2.6 million in sanctions, which included $1 million in restitution to affected retail customers.
