The U.S. Securities and Exchange Commission (SEC) is the latest regulator to settle allegations of supervisory failures with the founder of Toronto-based day trading firm, Swift Trade Inc.
The SEC said Tuesday that it has charged, and settled with, Toronto-based Biremis Corp., and its co-founders, Peter Beck and Charles Kim, with failing to supervise traders who used the firm’s order management system to engage repeatedly in a manipulative trading practice known as layering; when traders place orders with no intention of having them executed but rather to trick others into buying or selling a stock at an artificial price driven by the orders, which the trader later cancels.
Biremis and the two executives agreed to a settlement in which the firm’s registration as a U.S. broker-dealer is revoked and permanent industry bars are imposed on Beck and Kim, who also will pay a combined $500,000 to settle the SEC’s charges. Biremis, Beck, and Kim neither admitted nor denied the findings contained in the SEC’s order.
The firm and the executives have previously been sanctioned by the UK’s Financial Services Authority (FSA) and Ontario Securities Commission (OSC), and the Financial Industry Regulatory Authority (FINRA) over similar allegations.
“Engaged and forceful supervisors are the first line of defense against individual misconduct in financial services companies,” said Robert Khuzami, director of the SEC’s division of enforcement. “Beck and Kim were neither, as they saw obvious red flags of market manipulation by their firm’s traders but failed to respond or take any steps to prevent the manipulation. They have learned the painful lesson that supervisors who fail to heed repeated red flags of misconduct will no longer have any place in the securities industry.”