NEW YORK – The U.S. Securities and Exchange Commission said Tuesday that online brokerage TradeZero America Inc. and its co-founder have settled civil charges, falsely telling customers they did not limit buying volatile “meme” stocks last year.
Tredziro and Daniel Pipiton, 47, both from the New York City Borough of Brooklyn, have been called in to settle the matter with an independent compliance consultant for two years and to pay a corresponding fine of $ 100,000 and $ 25,000 without admitting wrongdoing.
Defendants’ attorneys did not immediately respond to a request for comment.
The lawsuit stems from last year’s social media hype over stocks such as AMC Entertainment Holdings Inc., Gamestop Corp and Cos Corp from investors using online forums such as Reddit and Twitter.
According to the SEC, TradeZero stopped trading on AMC, GameStop and Koss for about 10 minutes on January 28, 2021 at the behest of its clearing broker, but later told investors that it had resisted suspensions.
The SEC said in a “Ask Me Something” session on Pipitone Reddit that “our clearing firm tried to block us and we refused” and he told the clearing broker “there is no way to stop this.” It further states that TradeZero has issued a press release promoting resistance against trading restrictions.
During the 36-hour period, including trading closures, pipetone statements and press releases, the number of applications for TradeZero’s new account was 200 times higher than its daily average over the previous year, the SEC said.
“This case sends a strong message that our capital market participants cannot exploit market turmoil to deceive consumers,” Melissa Hazman, associate director of the SEC’s enforcement division, said in a statement.
(Reporting by Jonathan Stampel in New York, edited by Matthew Lewis)