Broker Barred for Facilitating Private Fund Fraud

A broker that paid a portion of his commissions back to clients that committed alleged wrongdoing in connection with the operation of an unregistered fund was barred from the industry and ordered to pay restitution. The SEC alleges that the broker kicked back 90% of his commissions on fund trades as inducement to obtain the brokerage business. According to the SEC, the broker also helped solicit investors for the fund as a way to increase fund assets and brokerage. The SEC claims that the fund managers placed unauthorized trades, misappropriated client funds, and hid trading losses.

OUR TAKE: The SEC has been prosecuting service providers that facilitated, and benefited from, wrongdoing.


http://www.sec.gov/litigation/admin/2009/33-9060.pdf