NEW YORK (Reuters) – An electronic trading platform owned by JPMorgan Chase & Co will pay a $2.75 million civil fine to settle U.S. Securities and Exchange Commission (SEC) charges it failed to register as a broker-dealer for more than a decade.
It is the regulator’s first case charging an order and execution management system that facilitates electronic trading for operating as an unregistered broker-dealer.
The SEC said on Tuesday that Neovest Inc withdrew its broker-dealer registration after being acquired by JPMorgan in 2005, yet continued to process and accept payment for trades, and solicit customers and brokers through its website, banking conferences and trade shows.
According to the SEC, Neovest deprived customers of protections that come with registration, which include greater supervision and regulatory oversight, and procedures to safeguard customer information and prevent identity theft.
The SEC said Neovest agreed to the fine and a censure without admitting or denying wrongdoing.
“Neovest has taken a number of steps to enhance its security measures in recent years,” JPMorgan spokesperson Brian Marchiony said in an email. “There is no evidence that client data was compromised in any way.”
Utah-based Neovest describes itself as a leading “broker-neutral” electronic trading platform, whose order and execution management system lets customers route orders to buy and sell stocks and options directly to more than 360 brokers.
