ICAP Securities USA, the U.S. division of a big British brokerage, agreed Friday to pay $25 million to settle federal regulators' charges that it deceived customers by displaying thousands of phony trades in U.S. Treasury securities on its screens.
The Securities and Exchange Commission announced the settlement of civil fraud charges with ICAP Securities USA, which it described as the U.S. subsidiary of the world's largest broker of trades between banks, ICAP PLC of Britain. Inter-dealer brokers, as they are called, match buyers and sellers in over-the-counter markets for securities such as U.S. Treasuries and mortgage-backed bonds.
ICAP Securities USA, based in Jersey City, N.J., neither admitted nor denied the SEC's allegations but did agree to refrain from future violations of the securities laws. The firm was censured and agreed to pay $24 million in civil penalties and $1 million in restitution.
It also agreed to hire an independent consultant to review its internal controls and compliance procedures, and its trading activities.
The censure brings the possibility that the firm could face a stiffer sanction if the alleged infraction is repeated.
The SEC had alleged that from December 2004 through December 2005, ICAP displayed thousands of fictitious trades in Treasuries on its screens, and disseminated false trade information into the market to attract customers' attention and trades.
The SEC also reached settlements with five ICAP brokers, which it had accused of aiding and abetting the firm's conduct, and two senior executives accused of failing to adequately supervise the brokers.
The executives are Gregory Murphy, ICAP Securities' chief operating officer; and Ronald Purpora, the former president of ICAP North America and a member of ICAP PLC's global executive management group.
Murphy and Purpora each agreed to pay a $100,000 civil fine and to a three-month suspension from working as supervisors at any brokerage firm. The neither admitted nor denied the SEC's allegations.
The brokers are: Peter Agola, Ronald Boccio, Kevin Cunningham, Donald Hoffman and Anthony Parisi. They each agreed to pay a $100,000 civil fine except for Hoffman, who retired in 2006, who is paying a $50,000 fine. The five also agreed to a three-month suspension from working for any brokerage firm.
The brokers neither admitted nor denied the SEC's allegations but did agree to refrain from future violations of the securities laws.