The FinancialThe US Securities and Exchange Commission (SEC) has sued a Bahamian-based brokerage for illegally operating in the United States, according to a notice from March 22, 2021. The company MintBroker International Ltd., operating as SureTrader and headed by co-defendant Guy Gentile allegedly “operated an offshore broker-dealer that marketed its ability to help novice day traders in the United States circumvent U.S. rules that regulate “pattern day trading.” A pattern day trader is any margin customer that day trades four or more times in five business days, provided the number of day trades is more than six percent of the customer’s total trading activity for that same period.”
The regulator further alleges “that SureTrader, through its website, by email, and by means of advertisements on popular U.S.-based day trading websites, solicited thousands of U.S.-based customers to open accounts with and trade through SureTrader. The SEC further alleges that, although it was not registered with the SEC as a broker-dealer during this period, SureTrader nevertheless engaged in ongoing securities relationships with U.S. customers, including by holding funds and executing transactions on their behalf. According to the complaint, as a result of their efforts, SureTrader and Gentile received millions of dollars in transaction-based compensation.”
The lawsuit will be heard in the southern district of Florida and it remains to be seen what arguments the company can bring to its defense. The Bahamas has become a regulated jurisdiction for brokers as of late, although it remains on the list of risky jurisdictions for US regulators, including those tasked with determining the risks of transacting with firms outside of the United States.