NY brokerage firm Rafferty settles SEC charges over trades

Thu May 15, 2014 2:47pm EDT

May 15 (Reuters) - Rafferty Capital Markets LLC has agreed to pay about $850,000 to settle U.S. Securities and Exchange Commission charges that it illegally arranged trades for an unregistered broker-dealer, the regulator said on Thursday.

According to the SEC, Rafferty processed about 100 improper trades in asset-backed securities for the broker-dealer from May 2009 to February 2010, keeping 15 percent of the more than $4 million in compensation that the trades generated.

The SEC said that while Rafferty, which is based in Garden City, New York, was properly licensed, it was the unregistered firm that handled the business.

It also said Rafferty failed to properly keep records from people who worked on the unregistered firm's behalf, and that this shortcoming led to the concealing of two trades and caused its books and records to be inaccurate. The SEC did not identify the unregistered firm.

Registration rules "require those involved in trading securities to adhere to the proper regulatory framework, and registrants like Rafferty must face the consequences if they fail to think carefully and help unregistered firms avoid the rules," Andrew Calamari, director of the SEC regional office in New York, said in a statement.

Without admitting or denying wrongdoing, Rafferty agreed to pay a $130,000 civil fine, give up $637,615 of compensation from the arrangement, and pay $82,011 of interest.

Susan Merrill, a partner at Sidley Austin representing Rafferty, did not immediately respond to a request for comment. Rafferty did not immediately respond to a similar request.

Rafferty has fixed income, equity sales and trading, and equity research operations. Its staff includes Richard Bove, a well-known banking industry analyst. (Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)