U.S. regulators revoked the registration of Toronto-based brokerage Biremis Corp. and barred its founders from the securities industry for failing to supervise traders who engaged in a manipulative practice.
Peter Beck and Charles Kim, who founded the firm, from at least 2007 to 2010 ignored repeated red flags that affiliated traders outside of the U.S. were engaging in so-called layering, or placing non-bona-fide trades to trick others into buying and selling stocks at artificial prices, the Securities and Exchange Commission said. The two men agreed to pay a combined $500,000 to resolve the SEC’s claims.
Biremis and Beck were already expelled about five months ago by the Financial Industry Regulatory Authority, the U.S. brokerage industry’s self-regulator, which cited similar claims. Biremis, Beck and Kim didn’t admit or deny wrongdoing in settling the claims.
“Engaged and forceful supervisors are the first line of defense against individual misconduct in financial services companies,” SEC Enforcement Director Robert Khuzami said in a statement. “Beck and Kim were neither, as they saw obvious red flags of market manipulation by their firm’s traders but failed to respond or take any steps to prevent the manipulation.”
Many Biremis-affiliated day traders based outside of the U.S. engaged in repeated instances of layering from January 2007 to mid-2010, the SEC said. Beck and Kim learned from numerous sources, including three U.S. brokerages and a Biremis employee, that the manipulative practice was occurring, and failed to take any steps to prevent it, according to the order.
A phone call to Michael Wolk, an attorney for the firm and the executives, wasn’t immediately returned.