Is this bad? It sounds bad.
Neovest… replicated a database containing customer authentication information, including user names and passwords, to one of its most active customers and failed to exercise any supervision over the customer’s use of the database.
I mean, that definitely seems like something that a registered broker-dealer oughtn’t do. Wait, what’s that you say?
The order finds that although Neovest withdrew its broker-dealer registration after it was acquired, it continued to operate the OEMS as an unregistered broker-dealer by, among other things, participating in the order-taking and order-routing process and soliciting customers and destination brokers through the firm’s website and direct outreach at industry conferences and trade shows.
And if you think that the first thing wouldn’t have happened were it not for the second thing, well, the SEC sort of thinks so, too.
Neovest’s failure to register as a broker-dealer deprived its customers of protections associated with registration, including inspections and examinations by the SEC and the requirement to establish policies and procedures to safeguard customer information.
Also, did it say “acquired” there? Pray tell by who? Surely no acquisitive aspiring fintech giant.
Neovest, a subsidiary of JPMorgan Chase & Co….
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