A former executive at a transition management company agreed to pay a $975,000 fine in addition to a lifetime securities industry bar for his role in a fraudulent scheme to hide from clients significant overcharges for execution of trade orders.

In a Complaint, the SEC alleged that Khaled Bassily, former head of Global Transition Management at ConvergEx Execution Solutions LLC ("ConvergEx"), participated in a scheme in which ConvergEx regularly collected hidden trading profits in addition to disclosed commissions that were paid by customers. In order to collect the additional profits, ConvergEx's Global Transition Management Group allegedly routed transition management orders to its offshore affiliate, which then took undisclosed commissions on the trades, unbeknownst to ConvergEx customers.

Mr. Bassily allegedly made material misrepresentations to customers concerning the actual costs of executing transition management orders, and routinely coordinated with traders at the offshore affiliate in order to maximize trading profits while hiding charges from customers. Mr. Bassily was further accused of taking various measures to conceal the true nature of ConvergEx's transition management practices, including by encouraging an employee to use (i) a technological tool to hide broker identification for certain trades in a transparent foreign market and (ii) false business cards to deceive a prospective customer concerning ConvergEx's use of an offshore trader.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.