A broker-dealer settled charges regarding misconduct in the sale of market-linked investments ("MLIs") to retail investors. According to the SEC Order, the broker-dealer allegedly engaged in a trading strategy in which it encouraged retail customers to actively trade MLIs before their maturity. The broker-dealer failed to properly investigate these transactions despite internal policies against short-term trading.
The broker-dealer, without admitting or denying the allegations, agreed to return $930,377 of ill-gotten gains, plus $178,064 of interest, and to pay a $4 million penalty. The Order noted that the broker-dealer undertook "remedial acts" promptly and cooperated with SEC staff.
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