In July 2014, FINRA announced that Gary B. Lesnik, employed by Lightspeed Trading, LLC, submitted a Letter of Acceptance, Waiver and Consent in which he was assessed a deferred fine of $60,000, suspended from association with any FINRA member in any capacity for eight months and required to cooperate with FINRA in its continuing investigation. Without admitting or denying the findings, Lesnik consented to the sanctions and to the entry of findings that he operated an unregistered broker-dealer in willful violation of Section 15(a)(1) of the Securities Exchange Act of 1934.

The findings stated that after opening an account with Lesnik’s member firm, the unregistered broker-dealer operated as a day-trading company. The unregistered broker-dealer and Lesnik recruited retail customers to open accounts with his firm to day-trade securities using the unregistered broker-dealer’s offices and equipment. Lesnik was the registered representative of record on each of the unregistered broker-dealer’s customer accounts at his firm. The commissions that the unregistered broker-dealer earned, through Lesnik’s receipt and transfer of commission payments from his firm, constituted transaction-based compensation and effecting transactions in securities.

In addition, the findings stated that Lesnik shared commissions with unregistered persons. Lesnik’s firm paid him a total of $131,450 in commissions that were generated from trading activity by retail customers that the unregistered broker-dealer referred to his firm. Lesnik endorsed the monthly commission checks that he received to the unregistered broker-dealer, which in turn distributed the commissions to the owners and members, including Lesnik. The unregistered broker-dealer’s other owners and members were not registered with a FINRA member firm.