Toronto Brokerage, 2 Founders Tossed From U.S. Industry
Traders Magazine Online News, December 18, 2012
The Securities and Exchange Commission revoked the registration in the United States of a Toronto brokerage firm that it says failed to properly oversee the use of its order management system by day traders from around the world.
The SEC said that Biremis Corp. allowed as many as 5,000 on as many 200 trading floors in 30 countries to gain access to U.S. markets through its order management system – and place orders that would falsely drive up or down the prices into target stocks.
Besides revoking Biremis’ registration to operate in the United States, the SEC said it banned its two co-foudners, Peter Beck and Charles Kim, from working in the U.S. securities industry.
The firm engaged in a manipulative trading practice that the SEC and the Financial Industry Regulatory Authority call “layering.”
In July, FINRA – which regulates brokers -- expelled Biremis and barred Beck from further activity in the United States, after funneling large amounts of overseas day trading through its systems in Toronto to U.S. markets.
In “layering,” a trader places orders designed to trick others into buying or selling a stock at an artificial price driven by the “layers” of orders. But those trades ger canceled and new ones placed, to take advantage of the movements.
Beck and Kim repeatedly ignored “repeated red flags indicating that overseas traders were engaging in layering manipulations,’’ the SEC said. Biremis served as the broker-dealer for a Canadian day trading firm known as Swift Trade Inc.
Besides being barred from the industry, Beck and Kim also will pay a combined half-million dollars to settle the SEC’s charges. Michael D. Wolk, a Bingham McCutchen lawyer who represented Biremis and Beck before FINRA, could not be reached for comment.
“Broker-dealers must recognize that their supervisory responsibilities over their associated persons don’t end at the U.S. border,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement, in a statement. “Broker-dealers face severe consequences if they fail to supervise their traders who engage in manipulative trading, whether those traders are located in the U.S. or abroad.”
Last year, the United Kingdom’s Financial Services Authority decided to fine Swift Trade 8 million pounds for manipulating the share price of listed companies for short moments of time, using layering.
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