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March 26, 2015 at 09:45 AM
The SEC settled charges on Thursday with a corporate bond group and 21 third parties related to the buying and selling of fixed-income securities without proper registration.
Global Fixed Income of Chicago, its owner Charles Perlitz Kempf and the third-party participants agreed to pay nearly $5 million in disgorgement of profits and about $1 million in penalties.
An SEC investigation found that Global Fixed Income entered into agreements with third parties that acted as unregistered broker-dealers on its behalf and bought billions of dollars’ worth of newly issued bonds. The offerings were often oversubscribed, so Global Fixed Income could sell or “flip” the bonds within a few days for a small profit; it split profits with the third-party participants.
“Global Fixed Income essentially hired firms to act as brokers on its behalf and purchase billions of dollars of newly issued bonds to increase profitability in the bond market, yet none of the firms or their employees were registered to legally act as brokers,” said Michele W. Layne, director of the SEC’s regional office in Los Angeles, in a statement.
