Broker Charged With Repeatedly Putting Customer Assets At Risk

The Securities and Exchange Commission today announced that Electronic Transaction Clearing (ETC), a registered broker-dealer headquartered in Los Angeles, has agreed to settle charges that it illegally placed more than $25 million of customers’ securities at risk in order to fund its own operations. Among other things, the SEC found that ETC violated the Customer Protection Rule, which is intended to safeguard customers’ cash and securities so that they can be promptly returned if a broker-dealer fails. It requires broker-dealers to maintain physical possession or control of customers’ fully paid and excess margin securities. According to the SEC’s order, ETC put customer securities at risk numerous times in 2015.