finra

FINRA

 

FOR RELEASE:
CONTACTS:
Wednesday, October 16, 2002
Nancy A. Condon 202-728-8379
Michael Shokouhi 202-728-8304


NASD Settles Charges Against Swift Trade Securities for Deceptive Trading and Non-Bona Fide "Wash" Transactions in QQQ

Washington, D.C. — NASD today announced it has reached a settlement with Swift Trade Securities USA, Inc. and its President, Peter Beck, for engaging in a deceptive trading scheme involving fictitious "wash" transactions in the Nasdaq-100 Index Tracking Stock (QQQ) in an effort to obtain market data revenue generated from such transactions.

 

Swift USA and Beck were censured and fined, jointly, $75,000 and were required to give up $26,000, the profits from the fictitious wash sales. NASD suspended Beck for 30 business days in all capacities, and censured and fined Joseph Ianni, Vice President of Compliance and Swift USA, jointly, $25,000 for inadequate supervision.

 

From April 2002 through May 2002, Swift USA, a NASD-registered brokerage firm based in Toronto, Canada, operated a computer software program that simultaneously routed offsetting limit orders for QQQ to The Island ECN, Inc. The orders were solely for the account of Swift USA's only customer and Canadian-registered counterpart, Swift Trade Securities, Inc. Because Swift USA executed these orders for a single customer at the same price and quantity on both sides of the market, there was no change in Swift Canada's ownership of QQQ shares. Fictitious and non-bona fide transactions that do not result in a change of ownership are illegal.

 

NASD found that Swift USA, through Beck, violated NASD rules by executing these "wash" transactions through Island to profit from the market data revenue sharing provided by Island to its subscribers, while not subjecting Swift Canada to the risk of profit or loss from the underlying trading. As a result of this trading strategy, Swift USA received approximately $26,000 in illegal data revenue.

NASD also found that Swift USA and Joseph Ianni inadequately supervised the trading in Swift USA's proprietary account. In settling this matter, all Respondents neither admitted nor denied NASD's findings.

 

Investors can obtain more information about NASD as well as the disciplinary record of any NASD-registered broker or brokerage firm by calling (800) 289-9999, or by sending an e-mail through one of NASD's Web sites, www.nasdr.com.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business -- from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit www.nasd.com.