The U.S. Securities and Exchange Commission has confirmed that it has reached a settlement with Khaled Bassily, former chief of ConvergEx Group LLC's transition management business. The deal settles claims that Bassily played a role in the ConvergEx fraud scheme that used hidden charges to allegedly bilk clients of out of millions of dollars.
Bassily has been barred from the securities industry and consented to a final judgment that required him to pay disgorgement, interest and a civil penalty totaling $988,414. He neither admitted nor denied the allegations.
ConvergEx Exec Plays Lead Role in Fraud Scheme
The SEC filed suit against former ConvergEx chief Khaled Bassily in April of last year. The suit claimed that Bassily played a lead role in a fraud scheme that skimmed extra trading profits from customers by sending customer orders to a Bermuda affiliate that concealed markups on trades.
The SEC claims that Bassily’s group solicited large investors transitioning between fund managers or investment strategies by promising to be an "agency-only" brokerage, touting transparency and fair fees. In reality, the SEC says the group regularly routed customer orders to an offshore affiliate that profited from hidden markups and markdowns on trades, inflating profits at the expense of clients.
SEC Files Charges Against ConvergEx and Subsidiaries
The case against Bassily is only one of a slew of actions the SEC filed against ConvergEx and its subsidiaries for the alleged markup fraud scheme.
In December 2013, three ConvergEx subsidiaries settled an SEC civil claim and agreed to pay $107 million. ConvergeEx Group, as part of a deferred prosecution agreement, paid $43.8 million in restitution and criminal penalties.
In addition to Bassily’s case, the SEC also filed claims against two ConvergEx traders who pleaded guilty.
Are You a Victim of the ConvergEx Fraud Scheme?
If you lost money in investments made with ConvergEx or believe you are a victim of investment fraud, contact a qualified investment fraud attorney today.
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