TradeZero settles SEC charges of misleading clients about meme stock trading halt


NEW YORK, May 24 (Reuters) – The U.S. Securities and Exchange Commission said on Tuesday that online brokerage firm TradeZero America Inc and its co-founder had settled civil charges by falsely telling their clients that they had not restricted purchases of volatile “meme” stocks last year. .

The settlement requires TradeZero and Daniel Pipitone, 47, both of the borough of Brooklyn in New York, to retain the services of an independent compliance consultant for two years and to pay fines of $100,000 and 25, respectively. $000, without admitting wrongdoing.

Lawyers for the defendants did not immediately respond to requests for comment.

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The case arose out of last year’s social media-fueled frenzy for stocks including AMC Entertainment Holdings Inc (AMC.N), GameStop Corp (GME.N) and Koss Corp (KOSS.O), d investors using online forums such as Reddit and Twitter.

According to the SEC, TradeZero halted trading on AMC, GameStop, and Koss for about 10 minutes on January 28, 2021, at the direction of its clearing broker, but later told investors it resisted the stops.

The SEC said Pipitone said during an “Ask Me Anything” session on Reddit that “our clearing company tried to get us blocked and we refused” and that he told the broker to compensation “there is NO WAY to close them”. He also said that TradeZero issued a press release promoting its resistance to trade restrictions.

Over a 36-hour period, including the trading halt, Pipitone’s statements and the press release, new TradeZero account inquiries were more than 200 times its daily average compared to the previous year, said the SEC.

“This case sends a powerful message that participants in our capital markets cannot exploit market turbulence to mislead customers,” Melissa Hodgman, associate director of the SEC’s enforcement division, said in a statement. .

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Reporting by Jonathan Stempel in New York Editing by Matthew Lewis

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