Aug 14 The U.S. Securities and Exchange Commission said it charged brokerage Linkbrokers Derivatives LLC for taking profits of more than $18 million from customers by secretly manipulating the cost of securities trades processed by the firm.
The New York-based firm, which ceased acting as a broker-dealer in April 2013, has agreed to pay $14 million to settle the charges, the SEC said in a statement.
The regulator had previously charged four brokers at the firm's cash equities desk. Three of them later agreed to settle those charges for about $4 million.
The SEC said on Thursday brokers at the firm defrauded customers by promising very low commission fees, but charging fees that in some cases were more than 1,000 percent greater than represented, the SEC said. (1.usa.gov/1rbXBT6)
"These brokers hid the true size of the fees they were collecting by misrepresenting the price at which they had bought or sold securities on behalf of their customers," the SEC said.
The scheme involved more than 36,000 transactions between 2005 and February 2009, the SEC said.
"Linkbrokers employees engaged in a devious and abusive trading scheme orchestrated to steal from the firm's unsuspecting customers," said Daniel Hawke, chief of the SEC Enforcement Division's market abuse unit.
"(The) settlement strips Linkbrokers of its remaining assets and allows those funds to be returned to harmed customers," said Hawke.
Linkbrokers has settled without admitting or denying wrongdoing and will withdraw its broker-dealer registration, the SEC said. (Reporting By Neha Dimri in Bangalore; Editing by Saumyadeb Chakrabarty)