SEC Charges Three Brokerage Subsidiares with Fraud for Deceiving Customers about Commissions

The SEC has announced fraud charges against three brokerage subsidiaries, and two former employees, of a global trading services provider that caused many institutional clients to pay higher amounts than disclosed for the execution of trading orders.In a parallel action, the Department of Justice also announced criminal charges against the brokerage subsidiaries and two former employees.

The SEC order alleged that the brokerage firms routinely routed orders, including orders for U.S. equities, to an offshore affiliate in Bermuda that executed them on a riskless basis and opportunistically boosted their profits by adding a mark-up or mark-down on the price of a security.

See: SEC Press Release; SEC Order against ConvergEx Brokerages; SEC Order against Daspin; SEC Order against Lekargeren.