The Securities and Exchange Commission today charged broker-dealer
TradeZero America Inc. , and its co-founder, Daniel Pipitone, with
falsely stating to the firm’s customers that they didn’t restrict the
customers’ purchases of meme stocks when in fact they did.
late January 2021, many brokers restricted investors’ ability to
purchase a group of highly volatile stocks generally known as “meme
stocks. ” According to the SEC’s order, on January 28, 2021, TradeZero
was instructed by its clearing broker not to allow its customers to
purchase three meme stocks. TradeZero ultimately halted purchases for
about 10 minutes. After the halt, TradeZero and Pipitone made
misleading public statements via interviews, social media, and in a
press release in an effort to distinguish their company from brokers
that restricted trading during that period. For example, in a Reddit
“Ask Me Anything,” Pipitone said, “That some trading firms are
blocking these symbols is disgusting, unprecedented… Our clearing firm
tried to make us block you and we refused. ”
"This case sends
a powerful message that participants in our capital markets cannot
exploit market turbulence to deceive customers," said said Melissa
Hodgman, Associate Director of the SEC’s Division of Enforcement. "The
SEC has been committed to ensuring that our capital markets continue
to function in times of uncertainty, and today’s action highlights
this commitment. "
TradeZero and Pipitone consented to the
entry of the SEC’s order finding that they violated Sections 17(a)(2)
and (3) of the Securities Act of 1933. Without admitting or denying
the charges, TradeZero and Pipitone agreed to a cease-and-desist
order, retention of an independent compliance consultant to ensure
future compliance with the federal securities laws, a $100,000 penalty
for TradeZero, and a $25,000 penalty for Pipitone.
investigation was conducted by Heather A. Powell and Jason D. Schall
of the SEC’s Washington, D. C. office. They were supervised by
Assistant Director Melissa Robertson and Ms. Hodgman.
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