WASHINGTON (CN) - The SEC on Tuesday revoked the registration of a frequently fined Toronto brokerage and charged its president - also a frequent flyer - with failing to prevent market manipulation.
The SEC filed a cease-and-desist order against Biremis Corp., Peter Beck and Charles Kim.
Both Biremis and Beck, 57, the company president, have a checkered history, according to the SEC order.
This is the first disciplinary charge against Kim, the vice president.
Beck and Kim agreed to pay a total of $500,000, to be permanently barred from the U.S. securities industry and to have the company's registration revoked, the SEC said.
The SEC claims the defendants failed to supervise day traders who used Biremis' order management system to manipulate the market through "layering."
"In layering, a trader places orders with no intention of having them executed but rather to trick others into buying or selling a stock at an artificial price driven by the orders, which the trader later cancels," the SEC said in a statement. "The SEC's investigation found that Biremis - whose worldwide day trading business enabled up to 5,000 traders on as many 200 trading floors in 30 countries to gain access to U.S. markets - failed to address repeated instances of layering by many of the overseas day traders using its system. The firm's co-founders Peter Beck and Charles Kim ignored repeated red flags indicating that overseas traders were engaging in layering manipulations. Biremis served as the broker-dealer for an affiliated Canadian day trading firm, Swift Trade Inc."
It's not the first time around for Biremis and Beck, according to the SEC's 21-page cease-and-desist order: "In 2008, 2010 and 2011, FINRA fined Biremis $5,000, $20,000 and $25,000 respectively (and censured it in 2010 and 2011) for failing to properly transmit order data to FINRA's Order Audit Trail System ('OATS'). In 2010, Nasdaq censured Biremis and fined it $10,000 for supervisory deficiencies concerning the prevention of erroneous orders and transactions. Also in 2010, FINRA censured Biremis and fined it $50,000 for failing to establish, maintain and enforce supervisory procedures which would have prevented it from employing for over a year and a half a Controller who was statutorily disqualified from the securities industry as a result of a Canadian criminal conviction for embezzlement. In 2011, the United Kingdom Financial Services Authority found Biremis affiliate Swift Trade, Inc. to have committed market abuse through layering on the London Stock Exchange and fined it GBP 8 million. In 2012, the Ontario Securities Commission ('OSC') found Biremis, Swift Trade, Inc. and four other securities businesses affiliated with Biremis, Beck or Beck's family trust jointly and severally liable for financial management deficiencies, trade review deficiencies, books and records violations, and non-compliance with dealer registration requirements under the Ontario Securities Act. The OSC also barred Biremis and Swift Trade from trading or acquiring securities in Ontario for six years."
Beck's history does not look much better, according to the cease-and-desist order: "In 2002, NASD censured Beck, suspended him for 30 days, and fined him $101,000 for placing 'wash' trades in the over-the-counter equities market in violation of NASD rules and Exchange Act Section 10(b) and Rule 10b-5 thereunder. In 2010, FINRA fined Beck $10,000 and suspended him for six weeks for failing to establish, maintain and enforce supervisory procedures which would have prevented Biremis from employing for over a year and a half a Controller who was statutorily disqualified from the securities industry as a result of a Canadian criminal conviction for embezzlement. In 2009, the OSC reprimanded Beck and ordered him to pay $20,000 in costs for his acknowledgement that his non-willful lack of disclosure in OSC testimony about the beneficial ownership and effective control of Barka Co. Limited - then Swift Trade's largest customer - resulted in the OSC being misled about the actual beneficial ownership and effective control of Barka. In 2012 the OSC reprimanded Beck, barred him for two years from acting as an officer or director of a registrant, and found him jointly and severally liable with Biremis, Swift Trade, Inc. and four other securities businesses affiliated with Biremis, Beck or Beck's family trust for CAD 400,000 as a consequence of failing to supervise adequately his Chief Compliance Officer and authorizing, permitting or acquiescing in his securities-related companies' non-compliance with Ontario securities law."
Biremis also failed to file and suspicious activity reports, the SEC said.
Beck and Kim each agreed to pay $250,000, but neither had to admit they did anything wrong.
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