SEC Probe Uncovers Day-Trading Violations
A Securities and Exchange Commission investigation of the practices of 30 day-trading firms has discovered possible wrongdoing by 10 of them so far, SEC Chairman Arthur Levitt told Congress on Thursday.
The probe has led to cases on 10 unspecified firms being referred to the SEC’s enforcement division, Levitt told a Senate panel.
As expected, Levitt said the SEC’s probe of the largest firms has found problems with money lending, bookkeeping and misleading advertising. “Firms were simply sloppy with basic procedures,” Levitt told the Senate Governmental Affairs Committee’s subcommittee on investigations. “I find that worrisome.”
Still, Levitt said that “to date, we have not found marked and widespread fraud,” and he told reporters after the hearing that legislation would not solve the problems.
A group representing day-trading firms urged senators not to demonize the industry. “The individuals who day-trade represent the democratization of securities trading,” testified Saul Cohen, counsel for the Electronic Traders Assn.
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