Former head of ConvergEx Group’s transition management business gets barred from US securities industry
Khaled “Kal” Bassily agrees to pay more than $975,000 to settle fraud charges brought against him by the SEC in 2016.
Khaled “Kal” Bassily, the former head of ConvergEx Group’s transition management business, has agreed to be barred from the securities industry and has consented to a judgment ordering him to pay more than $975,000 to settle fraud charges the United States Securities and Exchange Commission (SEC) filed in 2016.
The SEC’s complaint alleged that Khaled “Kal” Bassily participated in a fraudulent scheme to hide from charities, religious organizations, and retirement funds that they paid substantially higher amounts than disclosed for the execution of trading orders.
Bassily, who did not admit or deny the SEC’s allegations, consented to the entry of a final judgment that ordered him to pay a total of $988,414 in disgorgement, prejudgment interest and a civil penalty and permanently enjoined him from violating Sections 10(b) and 15(c)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. Bassily also consented to the entry of an SEC order that barred him from the securities industry. Final judgment was entered on December 21, 2017, and the industry bar was imposed on January 3, 2018.
The settlement follows charges announced in December 2013 against three ConvergEx Group subsidiaries – G-Trade Services LLC, ConvergEx Global Markets Limited, and ConvergEx Execution Solutions LLC, that agreed to pay more than $107 million and admit wrongdoing to settle the matter. Two former employees and a former executive of another ConvergEx Group subsidiary also settled charges with the SEC related to this scheme. In August 2014, the SEC filed charges against Anthony G. Blumberg, a former executive of a ConvergEx Group subsidiary. The SEC’s charges against Blumberg are currently pending in federal court in Newark, New Jersey.
The SEC regularly updates on the distribution of funds to former clients of the ConvergEx Group subsidiaries.
The ConvergEx brokerage firms claimed to customers that they charge explicit commissions to execute equity trading orders. However, they usually routed orders, including orders for US equities, to an offshore affiliate in Bermuda that executed them on a riskless basis and bolstered their profits by adding a mark-up or mark-down on the price of a security. The offshore affiliate usually consulted with the client-facing brokers to assess the risk of customer detection before taking the extra money on top of the disclosed commissions. The mark-ups and mark-downs resulted in many customers unknowingly paying more than double what they understood they were paying to have their orders executed.
