{"id":78651,"date":"2021-06-30T01:01:21","date_gmt":"2021-06-30T05:01:21","guid":{"rendered":"https:\/\/www.hedgeco.net\/news\/?p=78651"},"modified":"2021-06-30T00:59:32","modified_gmt":"2021-06-30T04:59:32","slug":"electronic-trading-platform-charged-for-operating-as-an-unregistered-broker-dealer","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/06\/2021\/electronic-trading-platform-charged-for-operating-as-an-unregistered-broker-dealer.html","title":{"rendered":"Electronic Trading Platform Charged for Operating As An Unregistered Broker-Dealer"},"content":{"rendered":"\n<p>(HedgeCo.Net) The Securities and Exchange Commission today announced that <strong>Neovest Inc<\/strong>., a provider of an order and execution management system (OEMS) that facilitates electronic trading, has agreed to pay a <strong>$2.75 million penalty<\/strong> for its failure to register as a broker-dealer in violation of the federal securities laws.\u00a0 This is the SEC\u2019s first case charging an OEMS provider for operating as an unregistered broker-dealer.\u00a0<\/p>\n\n\n\n<p>According to the SEC\u2019s order, <strong>Neovest, a subsidiary of JPMorgan Chase<\/strong> &amp; Co., operates an OEMS that allows customers to route orders for stocks and options to more than 360 customer-selected destination brokers for execution.\u00a0 The SEC\u2019s order finds that prior to being acquired by JPMorgan Chase, Neovest engaged in this activity through its registered broker-dealer, Neovest Trading Inc.\u00a0 The order finds that although Neovest withdrew its broker-dealer registration after it was acquired, it continued to operate the OEMS as an unregistered broker-dealer by, among other things, participating in the order-taking and order-routing process and soliciting customers and destination brokers through the firm\u2019s website and direct outreach at industry conferences and trade shows.\u00a0 Neovest played a role in determining the routing options that were available to its customers by entering into agreements with the destination brokers.\u00a0 According to the order, in exchange for its OEMS services, Neovest also continued to receive transaction-based compensation by having payments from destination brokers redirected to J.P. Morgan Securities LLC, a registered broker-dealer, which then transferred the proceeds to Neovest.<\/p>\n\n\n\n<p>The SEC order further finds that Neovest\u2019s failure to register as a broker-dealer deprived its customers of protections associated with registration, including inspections and examinations by the SEC and the requirement to establish policies and procedures to safeguard customer information.&nbsp; As detailed in the order, during the period that Neovest failed to register, the firm replicated a database containing customer authentication information, including user names and passwords, to one of its most active customers and failed to exercise any supervision over the customer\u2019s use of the database.&nbsp;<\/p>\n\n\n\n<p>\u201cAccording to the SEC\u2019s order, Neovest circumvented the regulatory regime that grants broker-dealers the privilege of operating in our markets,\u201d said Joseph Sansone, Chief of the SEC Enforcement Division\u2019s Market Abuse Unit. &nbsp;\u201cToday\u2019s charges underscore the SEC\u2019s commitment to securing the important investor protections that flow from broker-dealer registration.\u201d<\/p>\n\n\n\n<p>The SEC\u2019s order censures Neovest and finds that it willfully violated Section 15(a) of the Securities Exchange Act of 1934.&nbsp; Without admitting or denying the SEC\u2019s findings,&nbsp;Neovest consented to the order and agreed to cease and desist from committing or causing any violations and any future violations of Section 15(a) of the Exchange Act, and to pay a $2.75 million penalty.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(HedgeCo.Net) The Securities and Exchange Commission today announced that Neovest Inc., a provider of an order and execution management system (OEMS) that facilitates electronic trading, has agreed to pay a $2.75 million penalty for its failure to register as a [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048,16047],"tags":[],"class_list":["post-78651","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news","category-insider-trading-2"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/78651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=78651"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/78651\/revisions"}],"predecessor-version":[{"id":78652,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/78651\/revisions\/78652"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=78651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=78651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=78651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}