因2012年至2015年期间的违规行为，颇受好评的智能投顾平台Betterment近日被金融行业监管局（FINRA）罚款40万美元。涉嫌违规的行为包括粉饰账面、违反《消费者权益保护条例》 （包括未能将客户的有价证券隔离到控制良好的地点）以及违背FINRA和美国证券交易委员会（SEC）条例要求，账簿记录不当等。Betterment上周接受了罚款，但对调查结果不置可否。此外，联合创始人兼前总裁Eli Broverman被罚款1万美元，财务和运营主管Richard Feldman被罚款5000美元。
在AWC陪同完成的《纠正措施声明》中，公司回应称："Betterment Securities重视对客户的责任及根据《证券交易法》和FINRA规则和条例需要承担的义务。在2014年的FINRA 审查中，公司配合检查人员，检查完成之前就开始实施改进建议，包括一系列系统、政策和程序改善。"此后，Betterment提高了财务运营（FinOps）的介入程度，扩大了监管范围，并于2017年8月聘请了一位新的首席合规官。Betterment发言人在被询问时确认"受到实际影响的客户数量为零。"该公司重申，罚款是因为 2014年检查过程中出现了问题，而在检查结束前，所有项目都已经得到纠正。"
While "move fast and break things" has long been a rallying call in the tech world, one fintech disruptor found out the hard way that allegedly breaking the rules can prove costly when moving too fast.
Betterment , the popular robo-advisor platform, was fined $400,000 by the Financial Industry Regulatory Authority (FINRA) for a variety of alleged violations that took place between 2012 and 2015. The alleged violations include window dressing, non-compliance with the Customer Protection Rule (including failure to segregate client-owned securities in a good control location) and improper book- and record-keeping pursuant to FINRA and SEC rules. Betterment accepted the fine last week without admitting or denying the findings.
Additionally, co-founder and former president Eli Broverman was fined $10,000, while financial and operations principal Richard Feldman was fined $5,000.
Betterment has grown exponentially since its founding at the beginning of the decade by Broverman and Jon Stein. It is the creator and leader in a passive investing movement known as robo-advising, which offers clients access to algorithmic money management technology for low fees. While every new business experiences some growing pains, compliance seems to have been overlooked during these formative years for the company.
This is an accounting practice known as "window dressing." The company claims it "conceived of the program as a method to give its customers faster access to the cash proceeds of securities sales. Specifically, the program allowed customers - as a courtesy and at no additional cost - to access cash proceeds from securities sales on the day after the transaction was executed rather than the standard three days, which is when securities transactions settle."
This program benefited Betterment because they "could provide its selling customers with early liquidity without accruing interest expenses," according to the AWC.
In the Corrective Action Statement accompanying the AWC, the company responded, "Betterment Securities takes seriously its responsibility to customers and its obligations under the Securities Exchange Act and FINRA rules and regulations. Throughout FINRA's 2014 examination, the Firm worked cooperatively with the Staff and began implementing recommended changes before the examination was complete, including a series of systems, policy and procedure enhancements."
Betterment has since expanded its FinOps (Financial Operations) role, expanded oversight and hired a new Chief Compliance Officer in August 2017. When reached for comment, a Betterment spokesperson confirmed that "no customers were actually impacted. To reiterate, the fine stemmed from the 2014 exam and all items were corrected before the finish of the exam."
This is not the first controversy surrounding Betterment. The company came under fire two years ago after the Brexit vote, when it halted trades during the ensuing market volatility and only notified financial advisors. Clients only found about it through a blog post three days later. Betterment users who feared the worst were unable to access their holdings, while users looking to capitalize and buy at a discount were out of luck.
Betterment's mission, as stated on their website, is "YOU COME FIRST. We have one mission: To empower you to make the most of your money, so you can live better." Yet not everyone agrees that Betterment customers were empowered, especially regarding access to their funds during a volatile situation.
With $10 billion in Assets Under Management, the fine amounts to a slap on the wrist for the company, though the disciplinary action will remain on its permanent record in FINRA's BrokerCheck.
Betterment is moving fast and breaking things. Breaking the rules is one thing; it needs to be careful to avoid breaking the trust of its customers.