The US Securities and Exchange Commission (SEC) has slammed TradeZero America, a broker-dealer, with $100,000 in fines.

Additionally, the watchdog sanctioned Daniel Pipitone, TradeZero’s Co-Founder, with a $25,000 penalty, it announced in a statement on Tuesday.

According to the independent agency, TradeZero and Pipitone were charged for “falsely stating to the firm’s customers that they didn’t restrict the customers’ purchases of meme stocks when in fact they did.”

The SEC said the act violated Sections 17(a) and (3) of the Securities Act of 1933.

“Without admitting or denying the charges, TradeZero and Pipitone agreed to a cease-and-desist order, retention of an independent compliance consultant to ensure future compliance with the federal securities laws, a $100,000 penalty for TradeZero, and a $25,000 penalty for Pipitone,” the Commission said in the statement.

Background

The SEC said in late January 2021, that many brokers restricted investors’ ability to purchase a group of highly volatile stocks generally known as “meme stocks.”

The agency said TradeZero on 28 January 2021 was instructed by its clearing broker not to allow its customers to purchase the three meme stocks.

The SEC explained further, “TradeZero ultimately halted purchases for about 10 minutes. After the halt, TradeZero and Pipitone made misleading public statements via interviews, social media and in a press release in an effort to distinguish their company from brokers that restricted trading during that period.

“For example, in a Reddit 'Ask Me Anything,' Pipitone said, 'That some trading firms are blocking these symbols is disgusting, unprecedented… Our clearing firm tried to make us block you and we refused.'”

Melissa Hodgman, the Associate Director of the SEC’s Division of Enforcement, said TradeZero’s penalty “sends a powerful message that participants in our capital markets cannot exploit market turbulence to deceive customers.”

“The SEC has been committed to ensuring that our capital markets continue to function in times of uncertainty, and today’s action highlights this commitment,” Hodgman added.

Meanwhile, last month the SEC and the Commodity Futures Trading Commission brought separate criminal charges of trading fraud against the family office, Archegos Capital Management, for a scheme that reportedly resulted in $10 billion of swap losses for the firm’s counterparties.

The US Securities and Exchange Commission (SEC) has slammed TradeZero America, a broker-dealer, with $100,000 in fines.

Additionally, the watchdog sanctioned Daniel Pipitone, TradeZero’s Co-Founder, with a $25,000 penalty, it announced in a statement on Tuesday.

According to the independent agency, TradeZero and Pipitone were charged for “falsely stating to the firm’s customers that they didn’t restrict the customers’ purchases of meme stocks when in fact they did.”

The SEC said the act violated Sections 17(a) and (3) of the Securities Act of 1933.

“Without admitting or denying the charges, TradeZero and Pipitone agreed to a cease-and-desist order, retention of an independent compliance consultant to ensure future compliance with the federal securities laws, a $100,000 penalty for TradeZero, and a $25,000 penalty for Pipitone,” the Commission said in the statement.

Background

The SEC said in late January 2021, that many brokers restricted investors’ ability to purchase a group of highly volatile stocks generally known as “meme stocks.”

The agency said TradeZero on 28 January 2021 was instructed by its clearing broker not to allow its customers to purchase the three meme stocks.

The SEC explained further, “TradeZero ultimately halted purchases for about 10 minutes. After the halt, TradeZero and Pipitone made misleading public statements via interviews, social media and in a press release in an effort to distinguish their company from brokers that restricted trading during that period.

“For example, in a Reddit 'Ask Me Anything,' Pipitone said, 'That some trading firms are blocking these symbols is disgusting, unprecedented… Our clearing firm tried to make us block you and we refused.'”

Melissa Hodgman, the Associate Director of the SEC’s Division of Enforcement, said TradeZero’s penalty “sends a powerful message that participants in our capital markets cannot exploit market turbulence to deceive customers.”

“The SEC has been committed to ensuring that our capital markets continue to function in times of uncertainty, and today’s action highlights this commitment,” Hodgman added.

Meanwhile, last month the SEC and the Commodity Futures Trading Commission brought separate criminal charges of trading fraud against the family office, Archegos Capital Management, for a scheme that reportedly resulted in $10 billion of swap losses for the firm’s counterparties.