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Abstract:TradeZero will pay $100,000 for allegedly misleading investors about stock trading halts
TradeZero America has settled its dispute with the U.S. Securities & Exchange Committee (SEC)
The agency accused the trading platform of misleading investors about meme stock trading halts
TradeZero denied these allegations but proposed a settlement of $100,000
An interesting chapter in meme stock history closed today. The U.S. Securities and Exchange Commission accused commission-free trading platform TradeZero America of providing false information to investors. The allegations are that TradeZero and its CEO Daniel Pipitone falsely told investors that TradeZero never restricted the trading of meme stocks in 2021. Over a year later, civil charges have been brought against the company and settled.
Neither Pipitone nor TradeZero have admitted any wrongdoing. But the company has agreed to pay penalties of $100,000 and Pipitone will pay $25,000.
The SEC alleges that the trading halt took place on Jan. 28, 2021. This date marks the height of the year’s iconic meme stock frenzy. According to regulators, TradeZero halted trading of GameStop (NYSE:GME), AMC Entertainment (NYSE:AMC) and Koss (NASDAQ:KOSS) for roughly 10 minutes, following direction from its clearing broker.
Reuters reports that the platform “later told investors it had resisted the halts.”
In its filing, the SEC highlighted an “ask me anything” session that Pipitone conducted on Reddit in which he discussed the trading halt. Allegedly, he stated that “some trading firms are blocking these symbols is disgusting, unprecedented. … Our clearing firm tried to make us block you and we refused. After three hours on the phone they backed down.”
However, the SEC says Pipitone “failed to disclose that TradeZero did comply with the clearing broker‘s demands and shut off its customers’ ability to purchase three securities in question for a period of time.”
According to Melissa Hodgman, associate director of the SECs enforcement division, “This case sends a powerful message that participants in our capital markets cannot exploit market turbulence to deceive customers.”
But many investors dont agree that the punishment fits the crime.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
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