Foreign Company Charged with Acting as an Unregistered Broker-Dealer

A foreign individual and his Bermuda organized trust ("Respondents") settled SEC charges for conducting securities transactions without registering as a broker-dealer.

The SEC determined that the Respondents were in the business of acquiring shares in U.S. private companies, usually in advance of a likely liquidity event, and selling those shares for a profit to domestic and international funds. According to the SEC, the Respondents acted as a broker-dealer in at least 30 pre-IPO transactions, purchasing "more than 14 million private company shares and [selling] more than 13.4 million shares to different pre-IPO funds or holding companies."

As a result of the failure to register as a broker-dealer, the SEC found that the Respondents violated Section 15(a) of the Exchange Act ("Registration and regulation of brokers and dealers"). To settle the charges, the Respondents agreed to (i) cease and desist from further violations, (ii) register as a broker-dealer, (iii) disgorgement of $3,363,526, (iv) prejudgment interest of $284,550.18 and (v) a civil monetary penalty of $269,360.