US Securities and Exchange Commission (SEC) has filed a case in federal court in Manhattan against four brokers for overcharging customers $18.7m through hidden markups and markdowns and secretly keeping portions of profitable customer trades.

In the complaint, the US market watchdog charged Marek Leszczynski, Benjamin Chouchane, Gregory Reyftmann, and Henry Condron, for their role in purchasing and selling of securities on behalf of their customers.

The US market supervisor argues that after receiving and executing a customer’s limit order to buy shares, the brokers waited to sell that same stock at a higher price than at which the customer’s trade was executed.

SEC Division of Enforcement Director Robert Hisami said, "These brokers stole millions of dollars by overcharging customers for trades involving stocks with high trading volumes and price volatility, which are characteristics they wrongly thought would conceal their illicit pricing scheme."

The watchdog alleged that they earned performance bonuses totaling more than $15.6m by defrauding customers, stealing portions of their profitable trades and keeping them for the firm.

In the complaint, SEC further charged that they enticed the customers, mainly large foreign institutions and foreign banks, by offering low commissions on trading, ranging between $0.005 and $0.02 per share.

The enforcement agency has sought for disgorgement of ill-gotten gains with prejudgment interest, financial penalties, and a permanent injunction against the brokers.