FINRA Charges SoFi Financial after Unauthorized Funds Transfers

SoFi Financial, headquartered in San Francisco and catering to self-directed retail clients, has agreed to a $1.1 million penalty to resolve charges from the Financial Industry Regulatory Authority (FINRA).

The settlement relates to a five-month period during which SoFi’s cash management brokerage accounts were susceptible to fraud. During this time, perpetrators managed to transfer $8.5 million from stolen external accounts into SoFi’s accounts undetected, with $2.5 million withdrawn before the issue was identified.

SoFi voluntarily reported the unauthorized fund transfers to FINRA, highlighting events spanning from 2018 to 2019. The firm settled the charges and accepted a $1.1 million fine and a censure. All affected parties have been reimbursed following SoFi’s review of “thousands of high-risk accounts.”

Weak Verification Systems

Weak internal and external customer identification and verification systems from December 2018 to April 2019 reportedly facilitated the theft. SoFi Money applicants exploited these vulnerabilities by opening approximately 800 accounts using stolen or fake identities.

The perpetrators linked these accounts to external bank accounts, enabling the transfer of funds into SoFi Money accounts, from which they withdrew approximately $2.5 million.

FINRA noted that SoFi’s failure to establish and maintain a robust identity verification program contributed to the fraud. SoFi’s account approval process allowed for the opening of accounts despite red flags in applicants’ backgrounds.

Additionally, the system failed to detect previous fraud attempts by some applicants, despite consultant recommendations to update the system.

SoFi’s transition to a bank holding company in February 2022 led to the cessation of offering SoFi Money to new customers in June 2022, except under limited circumstances.

This settlement follows a previous agreement between SoFi and FINRA regarding inadequate supervision of its fully paid securities lending program, for which SoFi paid $700,000 in customer restitution and fines.

Securities Fraud Attorneys

If you are concerned about your investments with SoFi Financial, please call the securities attorneys at The White Law Group at 1-888-637-5510.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.

With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment, and financial business transactions attempt to recover their investment losses.