The US Securities and Exchange Group announced that Khaled Bassily, the ex-head of ConvergEx Groups’ transition management business, has settled institutional investor fraud charges accusing him of taking part in a scam to hide from certain clients, which included religious organizations, retirement funds, and charities, that they were paying substantially more than they thought for trading orders. Bassily, who agreed to pay more than $988K in disgorgement, prejudgment interest, plus a civil penalty, settled the case without denying or admitting to the charges.
The regulator brought the case against him in 2016. According to its complaint, over five years, Basily hid from transition management customers that their brokerage orders were being directed to an offshore affiliate where concealed charges were put into the price that they paid for selling and purchasing securities. These secret charges were an add on and frequently much higher than the commissions that customers paid for their orders. For example, stated the SEC’s complaint, one customer who paid $699K in commissions also paid $9.6M in these hidden fees.
Meantime, Bassily allegedly engaged in deceptive practices, including “false and misleading statements” to customers, working with traders to maximize theses hidden charges, and taking steps to hide these unauthorized charges from customers.
As part of the SEC’s case against him, Bassily is now barred from the securities industry.
In 2013, three ConvergEx Group subsidiaries consented to pay over $107M and admitted that they engaged in wrongdoing that involved compelling a number of institutional clients to pay much higher fees than what was disclosed to them. The DOJ also filed criminal charges against brokerage firm and subsidiary ConvergEx Group, which consented to pay $43.8M in restitution and criminal penalties.
Institutional Investor Fraud
At the SSEK Partners Group, our institutional investor fraud law firm represent retirement plans, charitable organizations, private foundations, religious organizations, municipalities, school districts, trusts, financial firms, corporations, partnerships, and other types of institutions, as well as high net worth individuals that have sustained significant investment losses due to fraud. We know that the stakes are high for our clients and that these losses could impact not just the institutions involved but perhaps even hundreds if not thousands of people.
Our securities law firm has successfully arbitrated and litigated against hundreds of financial firms on behalf of clients for nearly three decades. Contact us today.
Former Transition Management Executive Agrees to Securities Industry Bar and is Ordered to Pay Over $975,000 to Settle Fraud Charges, SEC, January 3, 2018
Read the SEC Complaint (PDF)
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