SEC Charges Broker For Illegal IPO Kickback Scheme

The SEC charged a former registered representative with Exchange Act violations in connection with allegations that he gave certain customers preferential access to initial public offerings ("IPOs") and secondary offerings in exchange for cash kickbacks.

In its Complaint, the SEC alleged that Brian Hirsch, while working as a member of the wealth syndicate desks at two broker-dealer firms, determined the offering allocations for certain groups of retail customers. Mr. Hirsch allegedly entered into arrangements with two customers granting them preferred access to public stock offerings in exchange for a percentage of the customers' profits from secondary market trading in the relevant stocks. This practice, the SEC found, violated both securities laws and the firms' policies regarding the allocation of securities offerings. The firms expressly prohibited allocations based on quid pro quo arrangements. The SEC alleged that Mr. Hirsch received approximately $1 million