SEC Charges Nearly Two Dozen Unregistered Broker-Dealers with Participating in Scheme to Obtain Increased Offering Allocations

The SEC announced charges against nearly two dozen companies and individuals who regularly bought and sold securities on behalf of a trading firm without registering with the SEC as broker-dealers.

An SEC investigation found that Global Fixed Income LLC, which was primarily in the business of purchasing investment grade corporate bonds, entered into agreements with third parties that acted as unregistered broker-dealers on its behalf, buying billions of dollars' worth of newly issued bonds and causing Global Fixed Income's allocation in the bond offerings to increase. The SEC explained that because the offerings were often oversubscribed, Global Fixed Income generally was able to sell or "flip" the bonds within a few days for a small profit against the dollar value of the trade, and split the profits with its third-party participants.

Global Fixed Income, the owner who arranged the deals, and the 21 third-party participants agreed to settle the SEC's charges. The SEC ordered the parties collectively to pay nearly $5 million in disgorgement of profits plus approximately $1 million in penalties.

See: SEC Order against Global Fixed Income; SEC Order against Individual.