The Securities and Exchange Commission filed an enforcement action against Benjamin Mekawy and Alan Seidel for aiding and abetting minimum net capital violations of a broker-dealer that employed them – Seidel & Co., LLC – from October through November 2016. Mr. Seidel was the founder of the broker-dealer and, at the relevant time, a part-owner and the chief executive officer; Mr. Mekawy was an employee of the firm.
According to the SEC, during the relevant time, the firm had inadequate regulatory capital to meet SEC minimum requirements. However, to the firm’s third-party financial operations professional (FINOP), the SEC and the Financial Industry Regulatory Authority, Mr. Mekawy concealed a liability for back rent by falsely claiming it had been paid in full; Mr. Mekawy forged an account statement from the firm’s clearing broker to show a larger balance on deposit than actually existed; and Mr. Seidel falsely represented that a US $1 million deposit into one of the firm’s bank accounts represented a capital infusion when, in fact, it was solely loan proceeds, alleged the SEC.
The SEC seeks an injunction against futures violations and fines from each of the defendants. The SEC filed its enforcement action in a federal court in New York City.