SEC Charges RSE Markets Inc. for Operating an Unregistered Securities Exchange

The Securities and Exchange Commission (SEC) has announced that it has reached a settlement with RSE Markets Inc. regarding charges of operating as an unregistered exchange. RSE Markets operated a marketplace and provided facilities that connected buyers and sellers of securities, specifically equity interests in collectible assets like valuable cars and watches.

According to the SEC’s order, between July 1, 2018, and November 20, 2021, RSE operated the Rally Platform, which consisted of the RallyRd.com website, the Rally App, and trading functionality. The platform allowed retail investors in the United States to purchase and sell securities. The secondary market trading for these securities exclusively took place on the Rally Platform within specific trading windows facilitated by RSE. RSE utilized an algorithm to match orders based on price and time priority, determining a final clearing price at which matched orders would be executed. Matched buyers and sellers were required to confirm their willingness to transact at the final clearing price. The SEC’s order states that the trading interests accepted by RSE were firm orders, as evidenced by data showing that almost all matched trading interests were confirmed and executed. Despite marketing the Rally Platform as a stock exchange, RSE did not register the platform as a national securities exchange and did not operate it under any exemption from registration.

Tejal D. Shah, Associate Regional Director of the SEC’s New York Regional Office, emphasized that RSE operated and promoted its platform as an exchange without complying with the SEC’s registration provisions. Operating an unregistered trading platform, like RSE did, denies investors important protections under securities laws, including disclosure filing requirements with the Commission and the obligation to maintain certain books and records.

As part of the settlement, RSE neither admits nor denies the SEC’s findings but has agreed to cease and desist from any violations or future violations of Section 5 of the Securities Exchange Act of 1934. RSE will also pay a civil penalty of $350,000.

The SEC’s investigation was conducted by Rebecca Reilly, John Lehmann, and Sandeep Satwalekar of the New York Regional Office, under the supervision of Tejal D. Shah.