Global Fixed Income and Others to Pay $5 Million to Settle Unregistered Broker-Dealer Charges

April 7, 2015 — In 2010, Congress established a financial fraud whistleblower program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Insiders may be eligible for significant rewards when they collaborate with the Securities and Exchange Commission (SEC) about a firm’s impermissible use of unregistered broker-dealers, or other securities law violations. Rewards for tipsters may be as much as thirty percent of the total recovery, so long as the proceeds exceed $1 million.

Almost Two Dozen Unregistered Broker-Dealers Allegedly Purchased Newly Issued Bonds on Behalf of Global Fixed Income, SEC Charges

Almost two dozen companies and individuals have been charged by the SEC with failing to register as a broker-dealer. Those charged frequently purchased and sold securities on behalf of an Illinois trading firm.
Global Fixed Income LLC reportedly made agreements with third parties acting as unregistered broker-dealers who would purchase newly issued bonds on Global’s behalf. The purchase of billions of dollars’ worth of the bonds caused Global’s allocation in the offerings to increase and ran up profitability in the bond market. Within a few days after the purchases, Global would flip the bonds for a small profit. This was generally easy to do given that the offerings were frequently oversubscribed. Global would then divide its profits with the unregistered broker-dealers.
The deals allegedly were arranged by Charles Perlitz Kempf, the owner of Global Fixed Income. Kempf, Global and 21 of the alleged unregistered broker-dealers have consented to settle the SEC’s charges. Collectively, those charged will pay almost $5 million in disgorgement as well as $1 million in penalties.

Whistleblowers Notify U.S. Government When Broker-Dealers Violate Securities Laws by Failing to Register

While Waters & Kraus was not working with a whistleblower on this SEC matter, we are representing tipsters in similar instances of SEC violations. If you have comparable claims against your employer or anyone else engaged in securities fraud, contact us or call our qui tam attorneys at 800.226.9880 to learn more about our practice and how we can work together to notify the government about SEC fraud and abuse. Our qui tam lawyers, like George Tankard and Anne Izzo in our Maryland office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.

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