FINRA, NYSE, Nasdaq, the Chicago Board Options Exchange and certain affiliated exchanges sanctioned a broker-dealer and permanently banned its former CEO for enabling foreign traders to conduct a manipulative trading scheme.
As previously covered, the SEC found that the broker-dealer's customers illegally profited from (i) placing and canceling orders to manipulate the buying and selling of stocks at artificial prices (a/k/a "layering") and (ii) buying and selling stocks to artificially affect options prices (a/k/a "cross-market manipulation").
FINRA found that the firm and its former CEO aided and abetted violations of the U.S. federal securities laws, violated Exchange Act Rule 15c3-5 (the "Market Access Rule"), and failed to implement required know-your-customer and supervisory procedures. Additionally, FINRA stated that the firm failed to (i) provide requested information in a timely manner and (ii) demonstrate high standards of commercial honor and equitable principles of trade.
In addition to permanently banning the broker-dealer's former CEO from the securities industry, FINRA and the securities exchanges imposed on the broker-dealer firm (i) a censure, (ii) a fine of $900,000 and (iii) trading restrictions and compliance undertakings.
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