We knew this was a virtual certainty after money-broker ICAP received a Wells notice from the SEC back in October.
ICAP has now been charged with fraud for engaging in deceptive broking activity and making material misrepresentations to customers concerning its trading activities.
Amongst other things, the SEC found the firm was posting thousands of false trades — known as “bird” trades — to encourage clients to trade.
ICAP has settled the charges with a $25m penalty.
Six individuals — Ronald Purpora, Gregory Murphy, Peter Agola, Ronald Boccio, Kevin Cunningham and Anthony Parisi — are being suspended for three months and will each pay a $100,000 penalty. A seventh, Donald Hoffman, who retired from ICAP almost four years ago, will pay a $50,000 penalty.
And then there’s the consultant. From the SEC:
ICAP also has agreed to retain an independent consultant to, among other things, review ICAP’s current controls and compliance mechanisms; its trading activities on all desks to ensure that the violations described in the order are not occurring elsewhere at ICAP; and ICAP’s books and records pertaining to trading records. Based on its review, the independent consultant will recommend any additional policies and procedures which are reasonably designed to ensure that ICAP complies with applicable provisions of the federal securities laws.
The full SEC complaint paints a pretty shabby picture of ICAP’s New York operations. That consultant may have his/her work cut out.