Investors whose portfolios increased in value received payouts equal to a percentage of the simulated net profits. On the other hand, Tradenet closed the funded trading accounts or portfolios that decreased in value, according to the SEC Order.
The SEC determined that the contracts to provide funded trading accounts were security-based swaps under the U.S. federal securities laws.
In a statement, the SEC Complex Financial Instruments Unit Chief Daniel Michael said, “Companies seeking to sell U.S. retail investors synthetic exposure to stocks must ensure compliance with the federal securities laws. We will continue to watch the market for unregistered offerings of security-based swaps.”
Tradenet agrees to settle the SEC charges
Tradenet decided to settle with the SEC without admitting or denying the allegations against it. The firm agreed to pay a penalty of $130,00.
The day-trading education firm also agreed to cease and desist from committing or causing any violations and any future violations of Section 5(e) of the Securities Act and Section 6(l) of the Exchange Act.
