The U.S. Securities and Exchange Commission accused OptionsXpress Inc., its former chief financial officer Thomas E. Stern and an affiliated dealer of violating registration requirements in order to avoid an audit.
The action filed today in administrative court in Washington is the second against OptionsXpress and Stern this week. They were named in an April 16 enforcement case accusing them of engaging in a scheme to allow illegal short sales.
OX Trading LLC operated as an unregistered dealer from October 2009 to November 2010 and illegally traded securities while not being a member of a national securities association or national exchange, the SEC said. Stern, who was also Ox Trading’s chief compliance officer, fabricated and backdated a letter to demonstrate that he had properly informed regulators that OX Trading would de-register and become a customer of optionsXpress, according to the order.
“OptionsXpress, OX Trading, and Stern have displayed a profound disregard for regulators, compliance obligations, and the regulatory requirements that dealers must satisfy for the privilege of operating in our markets,” Daniel Hawke, head of the SEC’s market abuse unit, said in a statement. “Registration of brokers and dealers is a fundamental part of the regulatory structure and provides the foundation upon which other investor protections are built.”
A phone call to Vincent Schmeltz, Stern’s attorney, wasn’t immediately returned. Stephen Senderowitz, a lawyer for OX Trading and OptionsXpress, declined immediate comment.
To contact the reporters on this story: Joshua Gallu in Washington at firstname.lastname@example.org