The Financial Industry Regulatory Authority is charging Lek Securities Corp., along with its CEO Samuel Lek, for aiding a customer's alleged manipulative trading.
The company and Lek are accused of assisting a customer known as "Avalon" in a manipulative trading plot from October 2010 to June 2015. Avalon is accused of practices including layering, spoofing and cross-product manipulation.
FINRA, along with several major stock exchanges, also charged the company with failing to comply with the U.S. Securities and Exchange Commission's Market Access rule. Lek was charged for causing the Market Access violations. The exchanges joining FINRA in the charges include the Intercontinental Exchange Inc.-owned New York Stock Exchange, NYSE Arca and NYSE MKT; the CBOE Holdings Inc.-owned Bats Global Markets exchanges; the Nasdaq Inc.-owned Nasdaq BX; and the International Securities Exchange.
The company and its CEO were accused of failing to supervise or monitor Avalon with risk-management controls, along with other rules including the preservation and supervision of electronic communications, the maintenance of information and supervision of an employee's out-of-the-office activities.
The disciplinary complaint is the first step by FINRA in a formal proceeding. The individuals and companies named in a complaint then have the option to file a response and request a disciplinary panel hearing, the self-regulatory agency said. FINRA said remedies include fines, suspension, censure or a ban from the securities industry.