May 15 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