Statement Summary
The SEC has appointed Rust Consulting, Inc. as the Fund Administrator for a $2.5 million distribution fund following Louis Capital Markets, LP‘s violations from 2008 to 2012, which involved providing customers with false pricing on securities transactions. This led to undisclosed markups and markdowns that collectively cost customers millions. The funds, derived from a previous disgorgement order, will now be managed by Rust, with a bond of $2.5 million required, and authorized fees to be paid from the fund as needed. This action aims to ensure proper administration of funds for affected customers.
Original Statement
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 103134 / May 28, 2025
ADMINISTRATIVE PROCEEDING
File No. 3-17890
In the Matter of
Louis Capital Markets, LP,
Respondent.
ORDER APPOINTING FUND
ADMINISTRATOR, SETTING
ADMINISTRATOR’S BOND
AMOUNT, AND AUTHORIZING
THE APPROVAL AND PAYMENT
OF THE FEES AND EXPENSES OF
ADMINISTRATION
On March 29, 2017, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (the “Order”) against Louis Capital. In the Order, the Commission found that from at least 2008 through at least October 2012, Louis Capital gave its customers false prices on thousands of securities transactions, saddling the customers with lower sale prices and higher purchase prices than Louis Capital obtained in the markets. These markups and markdowns, which were imposed in addition to commissions, were not adequately disclosed to Louis Capital’s customers, and were inconsistent with the customers’ expectations. By charging these hidden fees, Louis Capital unlawfully obtained millions of dollars from its customers.
In the Order, Louis Capital was ordered to pay disgorgement of $2,500,000 to the Commission (the “Distribution Fund”). The Distribution Fund consists of the $2,500,000 collected from Louis Capital, and has been deposited in a Commission-designated account at the U.S. Department of the Treasury. Any accrued interest will be added to the Distribution Fund.
The Division of Enforcement (the “Division”) now seeks the appointment of Rust Consulting, Inc. (the “Fund Administrator”) and requests that the administrator’s bond be set at $2,500,000. Rust is included in the Commission’s approved pool of administrators. The Division further requests that the Commission authorize the Office of Financial Management (the “OFM”), at the direction of an Assistant Director of the Office of Distributions, to pay the Fund Administrator’s fees and expenses from the Distribution Fund, so long as the total amount paid to the Fund Administrator, including the invoice to be paid, does not exceed the total amount of the approved cost proposal submitted by the Fund Administrator.
Commission Order
Accordingly, IT IS HEREBY ORDERED that:
- Rust is appointed as the Fund Administrator, pursuant to Rule 1105(a) of the Commission’s Rules on Fair Fund and Disgorgement Plans;
- Rust shall obtain a bond in accordance with Rule 1105(c) of the Commission’s Rules, in the amount of $2,500,000;
- The Fund Administrator will submit invoices to the Commission staff for services rendered, in accordance with Rule 1105(d) of the Commission’s Rules;
- At the direction of the Assistant Director of the Office of Distributions, OFM is authorized to pay the Fund Administrator’s fees and expenses from the Distribution Fund, in accordance with Rule 1105(e) of the Commission’s Rules, so long as the total amount paid to the Fund Administrator, including the invoice to be paid, does not exceed the total amount of the approved cost proposal submitted by the Fund Administrator.
For the Commission, by the Division of Enforcement, pursuant to delegated authority.
Vanessa A. Countryman
Secretary
