U.S. regulators are the latest authorities to take action against former day trading firm Swift Trade and its founder, Peter Beck.
The Financial Industry Regulatory Authority (FINRA) announced Tuesday that it has expelled Biremis Corp., formerly known as Swift Trade Securities USA, Inc., and barred its president and CEO, Peter Beck, for alleged supervisory violations related to detecting and preventing manipulative trading activities, such as ‘layering’; short sale violations; failure to implement an adequate anti-money laundering program; and numerous other violations.
Biremis and Beck settled the allegations, neither admitting nor denying the charges, and consenting to the entry of FINRA’s findings, the regulator reported.
In announcing the settlement, FINRA said that it found that from June 2007 to June 2010, Biremis and Beck failed to establish a supervisory system reasonably designed to achieve compliance with laws and regulations prohibiting manipulative trading activity, such as layering; which involves the placement of non-bona-fide orders on one side of the market in order to cause market movement that will result in the execution of an order entered on the opposite side of the market, after which the non-bona-fide orders are canceled. It said that Biremis also failed to establish policies and procedures to detect and prevent manipulative activity designed to affect the closing price of a security.
Additionally, the regulator said that Biremis and Beck failed to implement an adequate anti-money laundering program; and that they violated a number of other securities laws and rules, including failing to maintain a margin system and margin accounts; failing to prepare customer reserve computations; placing thousands of short sale orders in violation of an emergency order issued by the SEC that temporarily banned short selling in certain securities; improperly calculating its net capital, and operating in net capital deficiency by up to $25 million; and, that the firm failed to maintain all required emails and instant messages.
Earlier this year, the Ontario Securities Commission (OSC) reached a settlement agreement with Swift Trade Inc. and Beck that resulted in registration and trading bans of various lengths ( including a six-year trading and registration ban for Swift Trade and Biremis, and a two-year registration and director and officer ban for Beck), along with financial sanctions, stemming from allegations of supervisory deficiencies here too.
And, last year, the UK’s Financial Services Authority made a preliminary enforcement decision against Swift Trade, fining it £8 million for “layering”. However, the firm is appealing that decision.