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Lek Securities Ex-CEO Samuel Lek Barred by FINRA and Major Exchanges

Lek Securities Accused of Enabling Manipulative Trading

The Financial Industry Regulatory Authority (FINRA) and most major US securities exchanges have permanently barred broker Samuel Lek, who is also the former CEO of Lek Securities. Meanwhile, the broker-dealer was fined $900K.

The bars by the self-regulatory organization (FSRO), the New York Stock Exchange (NYSE), the Nasdaq Stock Market, Cboe Global Markets, and their affiliate exchanges were part of 10 distinct settlements. They came in the wake of allegations that Lek Securities gave foreign traders market access and that some of these traders proceeded to engage in manipulative trading and fraud. Lek and Lek Securities settled the charges but without denying or admitting to them.

Shepherd Smith Edwards and Kantas (SSEK Law Firm) is a broker fraud law firm, and we are investigating claims of investor losses by former clients of Lek and Lek Securities. Please contact SSEK Law Firm so that we can help you explore your legal options.

Manipulative Trading by Foreign Traders Went On for Years, Says FINRA

FINRA contends that for a number of years, this market access that Lek Securities gave to foreign traders made it possible for them to take part in manipulative trading on US equity and options exchanges.

Fraudulent trading activities allegedly included the following:

  • Cross-product manipulation: This involves making orders and trades with one financial instrument so as to impact the price of a related financial instrument.
  • Layering: Making orders with no intention of executing them in order to affect a stock’s price and then cancelling the order. Often this involves high-frequency trading, which uses computers to make a big quantity of orders in just fractions of a second.
  • Spoofing: Tricking investors into selling or purchasing orders by making buy or sell orders and then cancelling the transactions or indicating there will be such orders but never fulfilling the transactions.

Lek Securities Also Penalized by SEC

FINRA said that Lek and the broker-dealer not only disregarded red flags and investigations by the SRO, the US Securities and Exchange Commission (SEC), and the exchanges, but also, they gave the traders who used a master sub-account at the firm office space, trading software, computer software, and other services while failing to supervise them.

In October, the SEC arrived at a final judgment in its own case against Lek Securities and Lek after it accused them of “facilitating manipulative trading” by a firm based in Ukraine for three years.

In addition to agreeing to a three-year injunction in which it had to conclude business with foreign customers possibly engaging in manipulative trading and market manipulating, as well as for the most part not being allowed to give foreign customers the option to engage in intra-trading, the broker-dealer was ordered to pay a $1M penalty plus nearly $526K in disgorgement with prejudgment interest. Samuel Lek was ordered to pay a $420K penalty.

With 28 years in the industry, 25 years as a Lek Securities broker, Samuel Lek also has been a registered broker with Ash & Co. and Bear, Stearns & Co. Lek Securities allowed him to resign in the wake of the SEC’s case. There are multiple regulatory disclosures listed on his BrokerCheck record, as well as one pending customer dispute claiming $500K in damages and alleging breach of contract, excess fees, and misrepresentations.

Brokerage Firm Negligence

Broker-dealers can be held liable for a failure to properly supervise their brokers and other registered representatives should fraud or negligence occur and result in investor losses. Contact our inadequate supervision fraud attorneys at SSEK Law Firm today.

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