The Securities & Exchange Commission today announced settled charges against RSE Markets Inc. for operating as an unregistered exchange by maintaining & providing a marketplace & facilities that brought together purchasers & sellers of securities, specifically equity interests in “collectible assets” such as valuable cars & watches.
The SEC’s order finds that, between July 1, 2018, & November 20, 2021, RSE operated the Rally Platform, consisting of the RallyRd.com website, the Rally App, & trading functionality, for retail investors based in the United States to purchase & sell securities. Secondary market trading for these securities occurred exclusively on the Rally Platform within trading windows provided by RSE. RSE used an algorithm to match orders based on price & time priority, calculated a final clearing price at which matched orders would execute, & required matched buyers & sellers to provide confirmation of their willingness to transact at the final clearing price. According to the SEC’s order, the trading interests that RSE accepted were firm orders, as demonstrated by representative data showing that almost all matched trading interests were confirmed & executed. Despite these facts, & RSE marketing the Rally Platform as a stock exchange, the company neither registered the Rally Platform as a national securities exchange nor operated it pursuant to an exemption from such registration.
“RSE operated & marketed its platform as an exchange but failed to comply with the SEC’s registration provisions,” said Tejal D. Shah, Associate Regional Director of the SEC’s New York Regional Office. “When a firm operates an unregistered trading platform, as RSE did, it deprives investors of important protections under the securities laws, including requirements to file disclosures with the Commission & create & maintain certain books & records.”
Without admitting or denying the SEC’s findings, RSE agreed to cease & desist from committing or causing any violations & any future violations of Section 5 of the Securities Exchange Act of 1934 & to pay a $350,000 civil penalty.
The SEC’s investigation was conducted by Rebecca Reilly, John Lehmann, & Sandeep Satwalekar, all of the New York Regional Office. The case was supervised by Ms. Shah.