SEC Charges Brokerage Firm with Overcharging Customers

The SEC charged the brokerage firm Linkbrokers Derivatives LLC ("Linkbrokers") with unlawfully and secretly taking profits of more than $18 million from customers by adding hidden markups and markdowns to their trades.

According to the SEC Order, certain representatives on Linkbrokers' cash equity desk defrauded customers by purporting to charge them very low commission fees while hiding the true size of the fees by misrepresenting the price at which the representatives had bought or sold the securities on behalf of their customers.

The SEC Order specifies that the scheme was difficult for customers to detect because the brokers charged the markups and markdowns during times of market volatility.

See: SEC Order; SEC Press Release.