U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25799 / August 2, 2023
Securities and Exchange Commission v. Ustocktrade LLC, No. 1:23-cv-06756 (S.D.N.Y. filed Aug. 2, 2023)
SEC Charges Owners of Broker-Dealer with Aiding and Abetting Violations of Net Capital Requirements
The Securities and Exchange Commission today charged Ustocktrade LLC and its owner Anthony Weeresinghe of Chestnut Hill, Massachusetts with aiding and abetting a registered broker-dealer's repeated violations of the SEC's net capital provisions. The SEC's net capital provisions are designed to ensure that broker-dealers have adequate liquid assets to meet their obligations to their customers.
The SEC's complaint alleges that Weeresinghe, through Ustocktrade LLC, owned and controlled an SEC-registered broker-dealer, Ustocktrade Securities, Inc., which operated an alternative trading system that was marketed to college students and other retail investors to engage in day trading. According to the SEC's complaint, Weeresinghe and Ustocktrade LLC were notified of 11 separate periods during 2021 when the broker-dealer's net capital fell below its minimum net capital requirement. The complaint alleges that Ustocktrade LLC and Weeresinghe substantially assisted the broker-dealer's net capital violations by continuing to operate the broker-dealer's customer trading platforms to conduct unlawful securities transactions during the deficiency periods. In addition, as alleged in the complaint, in November 2021, during the broker-dealer's final net capital deficiency, Weeresinghe directed the broker-dealer to transfer most of its remaining cash to Ustocktrade LLC, worsening the capital condition of an already capital deficient broker-dealer. In October 2022, the broker-dealer withdrew and terminated its registration with the SEC.
The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, charges Weeresinghe and Ustocktrade LLC with aiding and abetting the broker-dealer's violations of the net capital provisions of Section 15(c)(3) of the Exchange Act of 1934 and Rule 15c3-l thereunder. Without admitting or denying the allegations in the complaint, Weeresinghe and Ustocktrade LLC agreed to settle with the SEC and to the entry of a final judgment imposing permanent injunctions and penalties of $75,000 against Ustocktrade LLC and $10,000 against Weeresinghe.
The SEC's investigation was conducted by Stephen LeBlanc, Timothy Halloran, and Dan Furlano and was supervised by Lisa Deitch, Peter Rosario, and Stacy Bogert. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.