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Axos Clearing House

Axos Clearing (CRD #117176), a subsidiary of Axos Financial, is a clearinghouse, which is a financial institution that handles the execution of securities transactions. Clearinghouses work with other firms in order to help their brokers complete their transactions.

This firm does not work directly with customers but provides brokerage services for introducing broker-dealers. Investor accounts may end up with Axos Clearing in cases where an introducing broker-dealer withdraws its registration. Investors may also have used Axos Clearing margin accounts.

Axos Clearing has its main address in Omaha, Nebraska. The firm got its start in 2002.

This form also provides clearing services under the d.b.a. Cor Clearing.

The firm also uses the following names:

Axos Advisor Services
Legent Clearing
Legent Clearing Corp
Legent Clearing
KP Clearing

Because Axos Clearing is registered as both an investment adviser and a clearing house, it is registered with both FINRA and the SEC.

Regulatory Actions

Using the firm’s CRD number, investors can look up Axos Clearing on FINRA BrokerCheck and read about regulatory allegations concerning misconduct. Clearing houses do not make recommendations to investors but can still violate regulatory rules that result in investor losses.

The following are only the two most recent regulatory actions. There are a total of 13 disclosures, dating back to 2005.

$250,000 Following Margin Account Allegations

In 2019, Axos Clearing consented to a $250,000 fine following allegations that the firm failed to provide investors with disclosures that include a written statement concerning the interest rate that can be imposed for margin accounts.

Margin accounts take on significant risk by using borrowed money to buy securities. These accounts also come with deposit minimum requirements and if the balance goes below the minimum requirement it may be subject to a margin call that requires investors to either deposit money into the customer account or to liquidate securities in order to meet the balance requirements. The margin loans come with interest, which may present a conflict of interest for the investor.

The Acceptance, Waiver, and Consent agreement (AWC) alleges that Axos Clearing charged margin interest that involved two components: a “base rate” and a “mark-up.” (AWCs allow firms to settle disputes with FINRA without admitting or denying FINRA’s findings.)

The AWC alleges that Axos Clearing charged a mark-up by an introducing broker-dealer often varied the mark-up depending on the size of the customer’s debit balance.

Alleged Regulation SHO Violation

In 2017, COR Clearing LLC entered into an Acceptance, Waiver, and Consent agreement in which it consented to the findings that the firm had violated Regulation SHO. Regulation SHO requires brokerage firms to have a “reasonable belief” that they can fulfill short-selling orders.

FINRA points out that the firm settled similar Regulation SHO violation allegations in 2013 when the firm consented to a fine of $1 million.

As part of the terms of the AWC, the firm consented to a censure and a fine of $35,000.

Fee Disclosures

Axos states in its Customer Relationship Summary (Form CRS): “We assess transactional fees in retail investor accounts. These fees can be in addition to fees charged by your investment adviser.”

The form goes on to state, “Generally fees are assessed on a transactional basis” and are paid by the investment advisers. The form lists following typical transactions:

Securities purchases and sales
Wire transfers
Account transfers
Stock reorganizations
Account maintenance
Margin interest
Sweep fees

Axos may receive payment for services provided to investment advisers.

The firm may also receive cash or non-cash compensation from third parties for certain transactions, such as order routing with market centers.

Do You Need Representation in Your Case Against Axos or COR?

If you believe Axos, COR, or another d.b.a of Axos charged you for margin interest without first disclosing the risks associated with margin accounts, you may have a case for a securities attorney. You can also speak with a securities attorney if you believe their failure to adequately conduct their clearinghouse duties resulted in losses. Contact info@kurtalawfirm.com or call (877) 600-0098.