SEC Charges Former Brokerage CEO for Role in Fraudulent Scheme

The SEC settled charges against the CEO of two brokerage firms for allowing employees to mislead customers.

According to the SEC, the firms under the CEO's control engaged in a scheme that caused customers to pay substantially higher amounts than the disclosed commissions for buying and selling securities.

The scheme involved concealing the practice of routing trading orders to an offshore affiliate in order to take hidden markups and markdowns. The CEO authorized his employees to suspend the taking of improper profits temporarily when a customer asked for a specific report that could reveal the hidden charges, and authorized the use of a proprietary trading algorithm to hide the charges from a customer in an otherwise transparent market.

See: SEC Complaint.Related news: SEC Charges Former CEO with Deceiving Customers about Trading Fees (August 7, 2014).