The Securities and Exchange Commission has charged Keith Wakefield, a former managing director and head of fixed income trading at IFS Securities Inc., an Atlanta-based broker-dealer, with causing millions of dollars of losses through unauthorized trading in fixed income securities. Wakefield was also charged with fraudulently obtaining approximately $820,000 in fictitious commission income.
The SEC’s complaint, filed in federal district court in Chicago, alleges that over a three-month period in 2019, Wakefield engaged in unauthorized speculative trading in U.S. Treasury securities, on behalf of IFS and incurred millions of dollars in losses for the firm.
The SEC alleges that Wakefield engaged in a variety of fraudulent practices to create the appearance of fictitious trading profits and disguise his unauthorized trading losses, including falsifying IFS’s books and records.
The SEC claims that from January 2017 through August 2019, he also fraudulently obtained approximately $820,000 in commission income based on fictitious payments from customers that he fabricated and recorded on IFS’s books and records.
According to the complaint, Wakefield’s fraud came to an end in August 2019 when IFS was unable to honor millions of dollars in unauthorized fixed income securities trades executed by Wakefield with more than a dozen counterparties. The firm was forced to close its business, withdraw its registration as a broker-dealer, and file for bankruptcy.
“As alleged in the complaint, Wakefield engaged in unauthorized speculative trading on behalf of IFS that caused the bankruptcy of the firm and substantial losses to the counter-parties to the trades,” said Kathryn A. Pyszka, Associate Regional Director of the SEC’s Chicago Regional Office. “We will vigorously pursue those who engage in misconduct that undermines the integrity of our markets.”
Wakefield has agreed to settle the SEC’s charges by consenting to a permanent injunction and to pay disgorgement plus prejudgment interest and a civil penalty in amounts to be determined by the court at a later date. The settlement is subject to court approval.
In a parallel action, the U.S. Attorney’s Office for the Northern District of Illinois announced criminal charges against Wakefield for related misconduct.