Unregistered Broker to Return $11M to Investors

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By Cameron Finch

March 9 — A Cyprus-based investment firm specializing in fixed return options agreed March 9 to pay $11 million to settle Securities and Exchange Commission allegations that it illegally sold binary options by failing to register its offering before soliciting U.S. customers.

Banc de Binary Ltd., its Israeli founder, Oren Shabat Laurent, and three affiliates jointly agreed to pay $7.1 million in disgorgement as well as $1.95 million in civil monetary penalties.

The money will be distributed to compensate harmed investors through a Fair Fund administered by the National Futures Association, a self-regulatory organization for the U.S. derivatives industry.

In a parallel Commodity Futures Trading Commission action, Banc de Binary, Laurent and the affiliates agreed to pay $2 million in penalties (CFTC v. Banc de Binary Ltd., D. Nev., No. 2:13-cv-00992, 3/9/16).

They will also be suspended from the securities industry for a year and permanently barred from issuing penny stock offerings.

Fraud Victims Beware

In related developments, the SEC said it has become aware of communications purporting to be from the commission offering legal services for Banc de Binary victims. Fraud victims should avoid e-mails from domains not ending in .gov and should be wary of potentially fraudulent and forged documents, the agency said in an alert warning investors about government impersonators.

To contact the reporter on this story: Cameron Finch in Washington at cfinch@bna.com.

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com.