On March 22, 2022, the U.S. Securities and Exchange Commission obtained final judgments against Global Investment Strategy UK Ltd. (GIS), a London, UK-based financial services firm, charged with clearing and settling billions of dollars of U.S. securities transactions without registering as a broker-dealer in violation of the federal securities laws, and John William Gunn, its founder and principal, charged with aiding and abetting those violations.

The SEC's complaint was filed on December 22, 2020, in federal district court in New York, New York. According to the complaint, from at least 2015 through 2019, GIS-which has never been registered as a broker or dealer in the United States-provided clearance and settlement services to hundreds of U.S. customers for trades primarily between U.S. buyers and sellers and involving billions of dollars' worth of securities. The complaint alleges that GIS was acting as an unregistered broker by providing the clearance and settlement services for its U.S. customers, receiving transaction-based compensation for the trades, extending margin to its customers, holding customer funds and securities, and soliciting customers for its brokerage services. As set forth in the complaint, by clearing through GIS, a customer could purchase securities valued at 20 or 30 times the equity in the account.

The SEC's complaint, filed in the Southern District of New York, charged GIS with violating the broker-dealer registration provisions of Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act) and Gunn with aiding and abetting GIS's violations, and sought injunctive relief and civil penalties. The Court denied a motion to dismiss filed by the Defendants. See SEC v. Global Investment Strategy UK Ltd. and John W. Gunn, No. 20-cv-10838-AKH, 2021 WL 4896127 (S.D.N.Y. Oct. 19, 2021).

GIS and Gunn each consented to the entry of a final judgment permanently enjoining them from violating Section 15(a) of the Exchange Act and ordering GIS to pay a civil penalty in the amount of $1 million and ordering Gunn to pay a civil penalty in the amount of $100,000. On April 8, 2022, the SEC issued orders barring GIS from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock, and suspending Gunn for a period of twelve months from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock.

The SEC's investigation was conducted by James Burt, Peter Lamore, and Sheldon Pollock of the New York Regional Office, and supervised by Lara Shalov Mehraban. The litigation was led by David Stoelting.

The staff would like to acknowledge the assistance of the Financial Conduct Authority of the UK.