The Financial Industry Regulatory Authority today expelled Biremis Corp., formerly known as Swift Trade Securities USA Inc., and barred its president and CEO Peter Beck for supervisory violations, officials said.
Finra officials said Beck's supervisory infractions are connected to detecting and preventing manipulative trading activities such as "layering," short-sale violations, failure to implement an adequate anti-money laundering program, and financial, operational and numerous other securities law violations.
Finra found that from June 2007 to June 2010, Biremis and Beck failed to establish a supervisory system designed to achieve compliance with the applicable laws and regulations prohibiting manipulative trading activity.
In concluding this settlement, Biremis and Mr. Beck neither admitted nor denied the charges, but consented to the entry of Finra's findings.
Finra claims that Biremis' supervisory system failed to include policies and procedures designed to detect and prevent layering on U.S. markets. Layering involves the placement of non-bona-fide orders on one side of the market in order to cause market movement that will result in the execution of an order entered on the opposite side of the market, after which the non-bona-fide orders are then canceled.
Biremis also failed to establish policies and procedures reasonably designed to detect and prevent manipulative activity designed to affect the closing price of a security. As a result, Biremis failed to detect and prevent potential layering activity and potential manipulation of the closing price of equity securities on U.S. markets.
Biremis and Beck also violated a number of additional securities laws and rules. Biremis failed to maintain a margin system and margin accounts, and did not have policies and procedures in place related to the use of margin. The firm also failed to prepare customer reserve computations and failed to maintain a special reserve bank account for the exclusive benefit of customers.
In addition, Finra alleges that Biremis placed thousands of short-sale orders, which was in violation of an emergency order issued by the SEC that temporarily banned short selling in certain securities. Also, between April 2008 and May 2009, Biremis improperly calculated its net capital, operating in net capital deficiency by up to $25 million. Additionally, the firm failed to maintain all required emails and instant messages over a five-year period.
"In creating a business that allowed a significant volume of overseas day trading to pass through its systems on a regular basis, Biremis and Beck needed to devote the appropriate level of resources and personnel to ensure that this business was properly supervised, yet failed on both accounts," said Thomas Gira, executive vice president and head of market regulation for Finra.
Gira also said that Biremis' inadequate supervisory system resulted in the firm violating multiple rules designed to "protect the integrity of the markets and to ensure that member firms adhere to the high standards required of the brokerage industry."