An interesting new development has occurred in one of the biggest hacking case to be discovered in the financial industry. The Maltese prime broker, EXANTE, now says that the US Securities and Exchange Commission (SEC’s) allegation is based on a flawed understanding of how the firm works.
On Tuesday, the SEC filed fraud charges against over thirty people for insider trading on information illegally obtained by Ukrainian hackers, and relayed that they were generating more than $100 million in illegal profits.
According to the charges, Exante Ltd. holds proprietary trading accounts at Interactive Brokers and at Lek Securities, which were used in connection with the scheme to make trades resulting in approximately $24.5 million in ill-gotten gains.
Exante says that this completely misrepresents its business model, and the regulatory conditions it operates in as a prime broker licensed by the Malta Financial Services Authority. The firm further denies that it acted as a hedge fund as was alleged in the complaint.
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In its complaint, the SEC said that several of Exante’s directors are also owners of defendant Global Hedge Capital Fund Ltd., and the two entities share employees. “Exante and Global Hedge frequently made illicit trades in the same securities, on the same days and around the same time, and often through the same IP addresses,” the charges read.
Exante responded, “The complaint completely misrepresents Exante, our business model, and the regulatory conditions we operate in. Exante has worked hard to build a strong brand respected by its peers that serves as a one-stop shop for all markets and instruments. The company was built for traders by traders and any illicit trading will not be tolerated.”
“Contrary to claims in the complaint as well as in the media, Exante has never been and is not a hedge fund. Our business model is to execute trades for our clients.”
The company added that it is in “direct contact with multiple authorities, including the MFSA, to resolve this issue swiftly. We have no doubt in time we will be proven to have acted in an appropriate manner and await the factual results.
“Our employees will continue to work hard to ensure Exante clients continue to receive outstanding service whilst gaining peace of mind and security.”