Wednesday, 24 December 2014
Last updated 11 hours ago
Dec 19 2013 | 11:46am ET
Hedge fund services firm ConvergEx Group has agreed to pay more than $150 million and to admit wrongdoing to settle allegations that it overcharged clients and covered it up.
Under a deal with prosecutors, a defunct ConvergEx subsidiary and two former employees have pleaded guilty, and ConvergEx itself has accepted a deferred-prosecution agreement. In addition, the closed Bermuda subsidiary and two other ConvergEx units admitted wrongdoing in a parallel civil case filed by the Securities and Exchange Commission.
According to the SEC, ConvergEx often charged institutional clients double what they thought they were paying by routing trades through the Bermuda unit. This allowed two employees at the firm, Jonathan Daspin and Thomas Lekargeren, to charge "undisclosed mark-ups and mark-downs."
Daspin and Lekargeren have pleaded guilty to conspiracy charges. They are cooperating with prosecutors, whose investigation is ongoing.
ConvergEx "engaged in a concerted and coordinated effort to fleece its clients by charging them millions of dollars in unwarranted fees," Mythili Raman, acting assistant attorney general, said. The firm then hid "those charges from its clients through a pattern of deception."
ConvergEx noted that "the employees who engaged in this misconduct are no longer at the company," that the Bermuda trading desk was closed and "the acitivity associated with these investigations was discontinued two years ago."
Dec 1 2014 | 10:21am ET
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Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.