SEC censures BGC Financial, imposes $1.25 million penalty over records

Order says firm didn't record $600,000 for broker's sports tickets as compensation

Jul 17, 2018 @ 1:49 pm

By InvestmentNews

BGC Financial, a New York-based broker-dealer that was spun off from Cantor Fitzgerald in 2004, has agreed to pay a $1.25 million penalty to settle charges that it failed to preserve audio files sought by the SEC and inaccurately recorded travel, entertainment and other expenses.

The SEC's order, which also censured the firm, said that after receiving document requests in 2014 from the Securities and Exchange Commission's enforcement department, BGC deleted audio files for the recorded telephone lines of eight brokers that were responsive to the document requests. According to the order, the department responsible for maintaining voice recordings was unaware of the SEC's request and deleted the files in keeping with the firm's policy of not maintaining them after one year.

The SEC order also found that BGC failed to maintain books and records that accurately recorded compensation, travel, entertainment and gifts. The firm provided one high-performing broker with season tickets for a New York-area sports team that cost more than $600,000 per year, and failed to record the payments for the tickets as compensation in its general ledger. BGC also reimbursed this same broker for more than $100,000 of expenses associated with an international trip for his birthday and other foreign travel that lacked a sufficiently documented business purpose. BGC inaccurately recorded these items as selling and promotion expenses, the SEC said.

BGC also reimbursed a different broker for thousands of dollars of personal expenses spent on his birthday party, his bachelor party and two separate trips to Las Vegas for his friends' bachelor parties," the SEC said.

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