(Reuters) - A brokerage that handled U.S. trading for Swift Trade, a now defunct "day trading" company accused this year of market abuses in Canada and Britain, may soon face regulatory charges in the United States.
The Financial Industry Regulatory Authority, an independent U.S. brokerage regulator, on July 6 slapped a "Wells notice" on Biremis Corp, a broker-dealer that once handled Swift Trade's buy and sell orders and shares with it a Canadian parent company called BRMS Holdings.
FINRA made a "preliminary determination to recommend that disciplinary action be brought against Biremis" for 45 separate rule violations from 2005 through 2010, according to the Wells notice reviewed by Reuters.
Such notices advise recipients that charges could be forthcoming, and allow them to mount a defense.
The notice comes as regulators globally focus on market manipulation, and puts a spotlight on the conduct of Biremis when it was a top-ten participant in the trading of securities listed on the New York Stock Exchange.
It is unclear precisely which alleged violations are covered in the Wells notice, which simply lists a series of numbered rules related to broad topics.
But these topics run the gamut, including trading ahead of customer orders and front running; margin requirements; the filing of misleading membership or registration information; anti-money laundering compliance; and a U.S. Securities and Exchange Commission emergency order on short selling.
Swift Trade, which dissolved late last year, was a client of Biremis until May 2009, according to the Ontario Securities Commission (OSC). It had 4,500 traders globally including in China, India, Europe, Panama, and Russia, the OSC said in March.
Though little known on Wall Street, Biremis was the third-largest liquidity provider for NYSE-listed stocks as recently as September 2006, and was in the top ten through most of 2007, according to Nasdaq's website.
A woman who answered a call to a Toronto phone number listed for Biremis said the company declined to comment. Phone messages left at numbers listed for BRMS were not returned.
A FINRA spokeswoman said on Wednesday the regulator does not discuss pending Wells notices.
TROUBLES MOUNTING
In March, the OSC accused Swift Trade of several significant breaches of securities law and "a culture of regulatory non-compliance" under Chief Executive Peter Beck, who is also the president of Biremis.
Swift Trade ran a "high-volume, multi-national, securities day-trading business," having traded about 22 billion shares globally in 2008, the OSC said.
Then last week, the UK Financial Services Authority (FSA) decided to fine Swift Trade $13 million for "systematically and deliberately" manipulating markets by "layering" large numbers of orders into the market to move stock prices, and then executing profitable trades on the other side before canceling the orders.
Swift Trade appealed the FSA fine. Its OSC case is ongoing.
Day traders are individuals, or retailers, who are very active and often short-term investors in securities markets. The FSA said Swift Trade's profits "were in excess of 1.75 million pounds," or about $2.79 million.
Back in the United States, FINRA has made market manipulation a priority after the May 2010 "flash crash" rattled investors and amplified calls for a fairer marketplace.
The regulator's enforcement and market regulation units both recommended disciplinary action on Biremis, according to the Wells notice, which was on FINRA's BrokerCheck website. The regulator also noted violations of nine exchange rules on behalf of operators Nasdaq OMX Group, NYSE Euronext and BATS Global Markets.
Biremis has settled five FINRA charges in the last few years.
(Reporting by Jonathan Spicer; Editing by Tim Dobbyn)
The Financial Industry Regulatory Authority, an independent U.S. brokerage regulator, on July 6 slapped a "Wells notice" on Biremis Corp, a broker-dealer that once handled Swift Trade's buy and sell orders and shares with it a Canadian parent company called BRMS Holdings.
FINRA made a "preliminary determination to recommend that disciplinary action be brought against Biremis" for 45 separate rule violations from 2005 through 2010, according to the Wells notice reviewed by Reuters.
Such notices advise recipients that charges could be forthcoming, and allow them to mount a defense.
The notice comes as regulators globally focus on market manipulation, and puts a spotlight on the conduct of Biremis when it was a top-ten participant in the trading of securities listed on the New York Stock Exchange.
It is unclear precisely which alleged violations are covered in the Wells notice, which simply lists a series of numbered rules related to broad topics.
But these topics run the gamut, including trading ahead of customer orders and front running; margin requirements; the filing of misleading membership or registration information; anti-money laundering compliance; and a U.S. Securities and Exchange Commission emergency order on short selling.
Swift Trade, which dissolved late last year, was a client of Biremis until May 2009, according to the Ontario Securities Commission (OSC). It had 4,500 traders globally including in China, India, Europe, Panama, and Russia, the OSC said in March.
Though little known on Wall Street, Biremis was the third-largest liquidity provider for NYSE-listed stocks as recently as September 2006, and was in the top ten through most of 2007, according to Nasdaq's website.
A woman who answered a call to a Toronto phone number listed for Biremis said the company declined to comment. Phone messages left at numbers listed for BRMS were not returned.
A FINRA spokeswoman said on Wednesday the regulator does not discuss pending Wells notices.
TROUBLES MOUNTING
In March, the OSC accused Swift Trade of several significant breaches of securities law and "a culture of regulatory non-compliance" under Chief Executive Peter Beck, who is also the president of Biremis.
Swift Trade ran a "high-volume, multi-national, securities day-trading business," having traded about 22 billion shares globally in 2008, the OSC said.
Then last week, the UK Financial Services Authority (FSA) decided to fine Swift Trade $13 million for "systematically and deliberately" manipulating markets by "layering" large numbers of orders into the market to move stock prices, and then executing profitable trades on the other side before canceling the orders.
Swift Trade appealed the FSA fine. Its OSC case is ongoing.
Day traders are individuals, or retailers, who are very active and often short-term investors in securities markets. The FSA said Swift Trade's profits "were in excess of 1.75 million pounds," or about $2.79 million.
Back in the United States, FINRA has made market manipulation a priority after the May 2010 "flash crash" rattled investors and amplified calls for a fairer marketplace.
The regulator's enforcement and market regulation units both recommended disciplinary action on Biremis, according to the Wells notice, which was on FINRA's BrokerCheck website. The regulator also noted violations of nine exchange rules on behalf of operators Nasdaq OMX Group, NYSE Euronext and BATS Global Markets.
Biremis has settled five FINRA charges in the last few years.
(Reporting by Jonathan Spicer; Editing by Tim Dobbyn)
Peter (again) was one step ahead ...