EXANTE, a global broker licensed in the UK, Cyprus, Malta and Hong Kong, has received a notable clarification from the U.S. Securities and Exchange Commission (SEC), clearing the organisation of incorrect fraud charges dating back to 2015.
Court filings at the time mischaracterised EXANTE as a ‘hedge fund’, accusing the trading platform provider of organising an insider-trading ring based on the use of hacked financial news updates. These charges inaccurately stated that EXANTE operated as an investment manager, despite the company's management of over $2 billion in client assets consistently functioning within the confines of its licence as an execution-only broker.
The original accusations were murky at best, as EXANTE, by nature of compliance, cannot engage in proprietary trading. Its representatives subsequently prompted the SEC to acknowledge the mischaracterisation of their market placement.
The original filings revolved around a case where various U.S. and international hedge funds allegedly purchased hacked financial news announcements, exploiting them to gain an unfair advantage in the market. While a select few of these trades took place using the EXANTE platform, relevant financial authorities actively regulate the company, each enforcing strict standards for compliance reporting, source of funds, and client money requirements.
Following a formal investigation, the SEC discovered a series of stock trades associated with a group of U.S. and EU hedge funds that appeared to be connected to data breaches from news providers. It was alleged that two hackers based in Ukraine gained access to this information, later accessed by the aforementioned group of funds. The critical distinction here is that EXANTE was mistakenly included in the SEC's list of hedge funds, raising the alarm with company officials.
While hedge funds and execution brokers often collaborate, EXANTE specialises in serving investment management clients. Despite some similarities, the business models differ significantly, as execution brokers don’t hold market positions. Hedge funds typically do maintain execution accounts with multiple brokers.
EXANTE does not engage in proprietary trading, does not trade client funds, and provides an execution platform for third-party traders without influencing their positions or offering advice on holdings. In cases involving insider dealing, the role of the execution platform is not relevant, as illicit activity would occur within the investing fund rather than the broker where trades are executed.
In an official statement, EXANTE spokespeople reiterated their concerns about the inaccurate charges, emphasising their collaboration with regulators to clarify the issue. The SEC has concluded that EXANTE had no role in the illicit market activities under investigation, dropping all charges.
Since 2015, EXANTE has continued to grow significantly, expanding its international presence and focusing on product innovation, client privacy, and excellent customer service. The broker is satisfied with the outcome and due diligence done by the SEC in clearing its name.