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Hold Brothers hit with $5.9 mln in fines for trading violations
Sept 25 |
Sept 25 (Reuters) - Wall Street's self-regulator, top exchanges and the U.S. Securities and Exchange Commission on Tuesday fined New York-based broker-dealer Hold Brothers On-Line Investment Services LLC more than $5.9 million for a series of violations including manipulative trading activities.
Hold Brothers, which primarily operates as a day-trading firm, was censured and fined $3.4 million by the Financial Industry Regulatory Authority, along with NYSE Arca Inc, the NASDAQ Stock Market LLC, NASDAQ OMX BX Inc, and BATS Exchange Inc.
In a related case, the SEC also said on Tuesday it charged Hold Brothers and three executives for allowing foreign traders to access U.S. markets and conduct manipulative trading through accounts the firm controlled. The SEC's charges were settled, with Hold Brothers agreeing to pay more than $2.5 million in fines.
FINRA said it found that Hold Brothers' largest account, Demostrate LLC, and an affiliate, Trade Alpha, had manipulated the prices of multiple securities as day-trading firms.
The independent regulator said it discovered "hundreds of instances" where the foreign day traders influenced the trading algorithms of unaware market participants to provide the traders with favorable execution pricing that otherwise would not have been available to them.
FINRA also said Hold Brothers had neglected to establish and maintain a supervisory system for the firm's trading activities, which caused the firm to overlook many "red flags" of suspicious trading. Even when instances of manipulative trading were made aware to its compliance department, FINRA said the firm failed to file necessary reports.
Thomas Gira, FINRA's head of market regulation, said Hold Brothers had essentially "turned a blind eye" to many of their trading activities and failed to comply with anti-money- laundering requirements.
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