A former brokerage firm CEO is facing allegations from U.S. authorities that he engaged in a scheme to charge clients hidden trading fees.

The U.S. Securities and Exchange Commission (SEC) charged Anthony Blumberg, former chief executive officer of a broker-dealer subsidiary of ConvergEx Group LLC, of deceiving brokerage customers with hidden trading fees. The SEC alleges that Blumberg engaged in a scheme to conceal the practice of routing orders to an offshore affiliate in Bermuda to add mark-ups or mark-downs to client orders.

The U.S. Department of Justice also announced parallel criminal charges against Blumberg today. The allegations have not been proven in either case.

The SEC’s complaint alleges that Blumberg violated the anti-fraud provisions of the federal securities laws and an SEC anti-fraud rule. It is seeking disgorgement of any ill-gotten gains with interest, a financial penalty, and permanent injunctive relief.

Last year, the SEC settled allegations with three ConvergEx subsidiaries, which agreed to pay more than US$100 million to settle the case. Two former employees also settled charges with the SEC. ConvergEx Group and its Bermuda-based brokerage operation also agreed to pay US$43.8 million to settle criminal proceedings against them. The Bermudan subsidiary has since been shut down.

“During his tenure, Blumberg directed a culture of deception and greed that systematically harmed investors,” said Stephen Cohen, an associate director in the SEC’s division of enforcement. “He had the power to put an end to this fraud, but instead used his power to encourage and perpetuate it.”