The Securities and Exchange Commission charged and settled with Global Fixed Income LLC, Charles Kempf, GFI’s chief executive officer, and 20 firms and individuals for an elaborate scheme to help GFI obtain newly issued corporate bonds and re-sell them at a profit. In general, GFI utilized the 20 third-party firms and entities to purchase corporate bonds in over-subscribed initial offerings—causing its own allowance to increase. None of GFI, Kempf or any of the other 20 third parties were registered with the SEC in any capacity. To effectuate this, GFI transferred money to relevant third parties prior to their purchase of new issues on its behalf. GFI subsequently sold the bonds in a few days for a profit, and split the profits with the third parties who had assisted it. In helping GFI this way, the SEC alleged that the firms and entities were acting as broker-dealers without required registration. To settle this matter, GFI and Kempf agreed to pay disgorgement in excess of US $2.4 million, a fine of US $500,000, and each third-party company, a fine of US $50,000, and each third-party individual, a fine of US $5,000. Mr. Kempf agreed not to associate with a registered entity or participate in a penny stock offering for 12 months.
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