US SEC Fines TradeZero America $100k for Meme Stock Deception

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

The watchdog also fined Daniel Pipitone, co-founder of TradeZero, $ 25,000 in fines, it announced in statement Tuesday.

According to the independent agency, TradeZero and Pipitone were charged with “falsely declaring to the company’s customers that they did not restrict customers’ purchases of self-shares when in fact they did.”

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

“Without confessing or denying the allegations, TradeZero and Pipitone agreed to a restraining order, the detention of an independent executive consultant to ensure future compliance with federal securities laws, $ 100,000 for TradeZero, and $ 25,000 for Pipitone,” the commission said in a statement.

Background

The SEC said in late January 2021, many brokers had limited the ability of investors to buy a group of highly volatile stocks generally known as “stock stocks”.

The agency said that TradeZero on January 28, 2021 was also instructed by its explanatory broker not to allow its clients to buy three self-shares.

The SEC explained further, “TradeZero finally stopped buying for about 10 minutes. After the shutdown, TradeZero and Pipitone made misleading public statements through interviews, social media and in a press release to distinguish their company from brokers that restricted trading during that period.

“For example, on Reddit ‘Ask Me Something,'” Pipitone said, “some trading companies are blocking these symbols is disgusting, unprecedented … Our explanation company tried to get us to block you and we refused. ‘ ”

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

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

Meanwhile, the SEC and the Business Futures Commission last month filed separate criminal charges of commercial fraud against a family office, Archegos Capital Management, over a scheme that reportedly resulted in $ 10 billion in exchange losses for the company’s counterparts.

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

The watchdog also fined Daniel Pipitone, co-founder of TradeZero, $ 25,000 in fines, it announced in statement Tuesday.

According to the independent agency, TradeZero and Pipitone were charged with “falsely declaring to the company’s customers that they did not restrict customers’ purchases of self-shares when in fact they did.”

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

“Without confessing or denying the allegations, TradeZero and Pipitone agreed to a restraining order, the detention of an independent executive consultant to ensure future compliance with federal securities laws, $ 100,000 for TradeZero, and $ 25,000 for Pipitone,” the commission said in a statement.

Background

The SEC said in late January 2021, many brokers had limited the ability of investors to buy a group of highly volatile stocks generally known as “stock stocks”.

The agency said that TradeZero on January 28, 2021 was also instructed by its explanatory broker not to allow its clients to buy three self-shares.

The SEC explained further, “TradeZero finally stopped buying for about 10 minutes. After the shutdown, TradeZero and Pipitone made misleading public statements through interviews, social media and in a press release to distinguish their company from brokers that restricted trading during that period.

“For example, on Reddit ‘Ask Me Something,'” Pipitone said, “some trading companies are blocking these symbols is disgusting, unprecedented … Our explanation company tried to get us to block you and we refused. ‘ ”

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

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

Meanwhile, the SEC and the Business Futures Commission last month filed separate criminal charges of commercial fraud against a family office, Archegos Capital Management, over a scheme that reportedly resulted in $ 10 billion in exchange losses for the company’s counterparts.

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