SEC charges ‘rogue trader’ for bankrupting IFS Securities through fraud

Rick Steves

The fraud only came to an end when IFS was unable to honor millions of dollars in unauthorized fixed income securities trades executed by Wakefield with more than one dozen counter-parties.

The Securities and Exchange Commission has charged Keith A. Wakefield with causing millions of dollars of losses through unauthorized trading in fixed income securities and with fraudulently obtaining approximately $820,000 in fictitious commission income.

The former managing director and head of fixed-income trading at IFS Securities has managed to ruin the Atlanta-based broker-dealer, according to the complaint.

From June through August 2019, Wakefield engaged in unauthorized speculative trading in U.S. Treasury securities, on behalf of IFS and incurred millions of dollars in losses for the firm.

The trader managed to create the appearance of fictitious trading profits and disguise his unauthorized trading losses, including falsifying IFS’s books and records. He also fraudulently obtained approximately $820,000 in commission income from IFS, the SEC alleged.

The fraud only came to an end when IFS was unable to honor millions of dollars in unauthorized fixed income securities trades executed by Wakefield with more than one dozen counter-parties. IFS was forced to close its business, withdraw its registration as a broker-dealer, and file for bankruptcy.

Kathryn A. Pyszka, Associate Regional Director of the SEC’s Chicago Regional Office, said: “As alleged in the complaint, Wakefield engaged in unauthorized speculative trading on behalf of IFS that caused the bankruptcy of the firm and substantial losses to the counter-parties to the trades. We will vigorously pursue those who engage in misconduct that undermines the integrity of our markets.”

Wakefield has agreed to settle the SEC’s charges by consenting to a permanent injunction and to pay disgorgement plus prejudgment interest and a civil penalty in amounts to be determined by the court at a later date.

Criminal charges have been pressed against Wakefield for related misconduct by the U.S. Attorney’s Office for the Northern District of Illinois.

Keith Wakefield has been in the securities industry since 1999 and previously worked at Cabrera Capital Markets, LaSalle Financial Services and ABN Amro Incorporated.

In September 2019, FINRA barred Keith Wakefield from “acting as a broker or otherwise associating with a broker-dealer firm” for refusing “to appear for on-the-record testimony requested by FINRA in connection with its investigation for, among other things, possible trading improprieties at his member firm.”

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