CEO Pays $700,000, Admits Wrongdoing, and Cooperates
The former CEO of a brokerage subsidiary agreed to pay over $700,000 in disgorgement and interest and admit wrongdoing for condoning illegal conduct involving routing trades to offshore affiliates in order to collect undisclosed and unearned trading profits. The defendant was also barred from the securities industry and agreed to cooperate with the SEC’s ongoing investigation. He may also be subject to further penalties, which the SEC would determine at a later date. The SEC complaint asserts that the defendant knew about the illegal activity, encouraged it, and helped to conceal it. The SEC’s Associate Enforcement Director, Stephen L. Cohen, admonished “Senior executives cannot permit deceptive practices by their subordinates.” The firm itself previously agreed to pay over $100 Million and admit wrongdoing to settle the charges.
OUR TAKE: The SEC wants to hold senior execs accountable for regulatory failures. Additionally, the Enforcement Division is apparently using the threat of future penalties as leverage to encourage cooperation in ongoing cases.