An order filed by the federal regulator charged that a <location idsrc=”xmltag.org” value=”LU/us.il.chicgo”>Chicago securities dealer whose chief financial officer was a one-time chief financial officer of optionsXpress calls for a hearing into whether that dealer continued to trade as a customer account under optionsXpress’s auspices, after delisting itself from the only market of which it was a member, the
The firm, called OX Trading, also had “de-registered” itself from
OX Trading was formed in
"There is no clear guidance suggesting that a firm such as OX trading, which is a proprietary trading firm that offered price improvement for optionsXpress customers should be registered as a broker dealer,'' said
OX Trading had no customers and was not a broker, however, said
“The issue that will be presented to the Administrative Law Judge is whether a trading entity whose principal function was to provide price improvement for its affiliate's customers acted as a dealer, which required registration, or as a proprietary trading firm, which did not,’’ Senderowitz said.
OptionsXpress is a separate entity, had nothing to do with OX Trading's registration and does not belong in this case, Senderowitz said.
Thursday’s action follows a separate action taken by the
In that case, the
Also charged in the case was one customer,
In the case initiated Thursday, the
According to the SEC’s order, Stern terminated OX Trading’s membership with the
OX Trading, after it started up, took electronic request for quotes from optionsXpress, allowing OX to “determine if whether it wanted to be the counterparty to an optionsXpress customer’s order.”
OX ceased being a member of the
“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,”
The allegations against Stern relating to the post-registration conduct were self-reported by optionsXpress after an internal investigation it initiated, according to Senderowitz. Stern was subsequently discharged.
According to the SEC’s order, both OX Trading and optionsXpress became wholly-owned subsidiaries of
OX Trading eventually acquired a
In the period from
"It's almost clear from the
The termination at optionsXpress, which the
OX Trading recently was closed, Senderowitz said, in anticipation of the implementation of the Volcker Rule.
That rule, being enacted as part of the Dodd-Frank Wall Street Reform Act of 2010, will prohibit certain types of financial institutions from trading with their own capital.
As for the 'abusive' naked short selling scheme case that the
"We believe both complaints are an effort by the
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