US SEC Orders Unregistered Broker-Dealer to Pay a $2.75 Million Penalty

The US Securities and Exchange Commission (SEC) announced on Tuesday that it had charged Neovest Inc., a provider of an order and Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term management system (OEMS) that facilitates electronic trading, for operating as an unregistered broker-dealer. This is the first case of its kind with the SEC charging an OEMS provider.

According to the press release, Neovest, a subsidiary of JPMorgan Chase & Co., agreed to pay a $2.75 million penalty for failing to register as a broker-dealer under the federal securities law. The SEC’s order details that Neovest performed its activities through Neovest Trading Inc, its registered broker-dealer, before being acquired by the major financial firm. However, after JPMorgan acquired it, the company withdrew its registration, continuing to operate the OEMS as an unregistered broker-dealer.

“Neovest played a role in determining the routing options that were available to its customers by entering into agreements with the destination brokers. (...) in exchange for its OEMS services, Neovest also continued to receive transaction-based compensation by having Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term from destination brokers redirected to J.P. Morgan Securities LLC, a registered broker-dealer, which then transferred the proceeds to Neovest,” the SEC stated.

Leaving Customers Unprotected

That said, the watchdog believes that withdrawing the broker-dealer registration left its customer unprotected. “According to the SEC’s order, Neovest circumvented the regulatory regime that grants broker-dealers the privilege of operating in our markets. Today’s charges underscore the SEC’s commitment to securing the important investor protections that flow from broker-dealer registration,” Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, commented.

As part of the SEC’s order, Neovest agreed to cease and desist from committing or causing any violations “and any future violations” of Section 15(a) of the Exchange Act.

Recently, the US SEC settled charges against Loci Inc. and its CEO, John Wise, for allegedly making false and misleading statements connected to fraud and an unregistered securities offering.