A broker-dealer settled SEC charges for making material misrepresentations and omitting facts regarding the firm's handling of customer orders in violation of Section 17(a)(2) of the Securities Act.
The SEC claimed that the broker-dealer routed approximately 6.4 million orders, entered primarily by low commission rate-paying customers, through unaffiliated broker-dealers. The SEC asserted that the practice was contradictory to the broker-dealer's marketing materials that described order routing to be through the broker-dealer's own "advanced technology." In addition, the broker-dealer provided information that was "unverified" and "at times, without basis" to customers relating to the identification of market centers where orders were placed.
While neither admitting nor denying the SEC order's findings, the broker-dealer agreed to (i) cease and desist from further violating securities regulations, (ii) a censure, and (iii) a penalty of $5 million, an amount that is indicative of the broker-dealer's "significant cooperation" with SEC staff.
Originally published 7 May 2020
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