The U.S. regulator says Peter Beck and Swift Trade Inc. failed to keep adequate watch over the trades occurring on their network.
"In creating a business that allowed a significant volume of overseas day trading to pass through its systems on a regular basis, Biremis and Mr. Beck needed to devote the appropriate level of resources and personnel to ensure that this business was properly supervised, yet failed on both accounts," FINRA's head of market regulation Thomas Gira said.
Founded in 1998 in a single small office in the north part of Toronto, Swift Trade slowly grew over the ensuing decade by helping day traders place buy and sell orders on multiple stock exchanges across the globe. In 2008 more than 22 billion shares changed hands on the company's network, and the company employed more than 4,000 traders worldwide.
Among the accusations, FINRA says Swift Trade failed to detect and prevent "layering," a practice whereby a user places a large buy or sell order on a stock and then cancels it, with the intent of temporarily moving the stock price in a certain direction and then either buying or selling a stake at the artificial market price.
Securities laws in the U.S. and most Canadian provinces prohibit placing an order that the trader has no genuine intention of completing.
The regulator also said the company failed to put policies and procedures in place related to the use of margin, and failed to adhere to a temporary SEC ban on short selling in certain securities. FINRA also says Swift Trade failed to implement an adequate anti-money laundering program.
"In concluding this settlement, Biremis and Mr. Beck neither admitted nor denied the charges, but consented to the entry of FINRA's findings," the regulator said in a statement.
The company was dissolved in 2010, but Swift Trade paid settlements related to regulator investigations in Ontario and the United Kingdom. In May 2011 the company paid a $13 million fine to the British Financial Services Authority for layering, and just last month Swift Trade agreed to pay a $400,000 fine to the Ontario Securities Commission for "manipulative trading activities.Suggest a correction