US Commission Rejected Claims Against EXANTE


EXANTE rejected claims implicating the Cyprus-based broker in an insider-dealing scandal, initially filed on February 18th, 2016, by the SEC, who went on to close multiple claims on the 21st of the same month. These claims included misrepresentations of EXANTE’s business functions, describing the execution-only broker as a hedge fund. EXANTE is not and never has been an investment fund of any description, and the charges – several of which were later settled with the SEC – involved EXANTE clients illegally paying for early access to third party news agencies receiving inside information which was then used to execute highly profitable trades, trades not influenced or advised on by EXANTE. There is no implication that EXANTE were involved in these trades nor procuring the information concerned, nor that the news agencies concerned were aware of the data breach.

Fortunately, the US commission rejected claims against EXANTE which rested on a misunderstanding of the business functions of the fund. Unbeknownst to EXANTE, some clients had accessed, possibly through illegal access to the EDGAR system used to release financial reporting data, unreleased financial data relating to listed equities. These same investment funds, based in Paris and Moscow, used the information to make profitable insider trades. There is no insinuation that EXANTE was aware of this activity, though the original filings mistakenly claimed EXANTE was also an investment fund. This unfortunately led to a series of inaccurate reports on the case, which constitute an unreasoned attack on EXANTE’s reputation.

EXANTE responded immediately to these claims, working directly with the relevant authorities topoint out clear errors in the description of their business model and stressing the strength of internal compliance procedures. EXANTE is fully compliant with all necessary source of funds regulation, and is fully regulated by both the FCA in London and the Hong Kong regulator, alongside their Cyprus and Maltese listings.The execution-only nature of the service means that EXANTE is not capable of insider dealing, since the organisation takes out no positions. Company spokespeople issued the following statement:

“Our staff will keep working hard to ensure Exante clients continue to receive outstanding service while maintaining peace and security.”

Before highlighting their determination to see the incorrect statements about EXANTE expunged, a goal to which the February 21st, 2016, rejection of multiple claims goes some distance. EXANTE described their strong internal procedures to avoid illegal trading, and again pointed out the false description of their business activities in the original filing. This has no impact on the claims, now partially settled, against EXANTE clients, since they were operating an execution-only service.

Those nine clients which still have outstanding claims were operating without EXANTE’s knowledge, which neither implies a compliance failure – since these were legitimate, regulated funds – nor any involvement of EXANTE in the planning of these trades, nor offering relevant advice. This is not surprising as those familiar with EXANTE and its regulatory permissions will be aware the broker offers a range of execution-only services to professional clients, allowing access to global financial markets. EXANTE offers a strong focus on international and cross-border transactions, with unrivalled client confidentiality and responsive customer service.

Since EXANTE offers an execution-only service and does not take out proprietary positions, it is extremely unfortunate the original filings described the firm as a hedge fund. Of course, hedge funds by definition hold positions on their own account, investing in markets to try and achieve uncorrelated returns in excess of a fixed benchmark. This entire line of business is alien to EXANTE, a broker set up by independent traders who sought to develop a market-leading platform for international trading.

The extensive regulatory requirements placed on EXANTE in order tooperate with regulatory permission in the UK and Hong Kong mean the firm follows the most exacting requirements in regards to client funds, data handling and other compliance areas. This makes it particularly egregious to see false claims about the business model of the fund repeated in public filings.

It is fortunate that these claims against EXANTE were swiftly rejected by the US Commission, a decision highlighting the difference between execution-only brokerage and investment funds. Given the business model of EXANTE, these claims were never in the least credible, and EXANTE are keen to continue offering their client base an international, responsive service focused on innovation and complying with all necessary regulation. With a growing client base and over $2 billion AUM as of 2023, EXANTE continues to go from strength to strength, providing an excellent service to its global client roster.