In the Romanian city of Cluj-Napoca, inside a garret up a narrow wooden staircase, four young men in T-shirts spend the day moving rapidly in and out of stocks, trying to ride their shifting momentum for profits. The four traders are part of a world-wide network initially set up by a Toronto-owned firm called Swift Trade Inc.

Beck also took an aggressive stance toward the law, say regulators in several countries where his firm has traded. The Financial Industry Regulatory Authority is expected on Tuesday to announce a settlement with Mr.

The activities are part of an even broader trend of manipulative trading from a raft of similar firms, whose traders around the world use fast computer connections to trade stocks in the U.

Many of those firms copied Mr. Investors often complain of a stock market increasingly hard to fathom, as ever more of its trading is rapid-fire and short-term, while less of it reflects the longer-term perspective of someone buying a stake in a business. Its trading activity at times made Swift a top trader on the Nasdaq Stock Market by volume. The atmosphere is pressured.

A former trader at the firm says it kept boxes of spare keyboards because traders sometimes smashed them in frustration as they struggled to ride shifting stock-price movements successfully.

Many engaged in deceptive tactics that caused other investors to pay more for stocks, or sell at lower prices, than they should have, regulators say.

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The strategy both Finra and the FSA focused on is called layering. An appendix described one instance of London trading in detail.

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Regulations in the U. Speaking to the Journal, Mr. Beck acknowledged that Swift traders engaged in this activity but he said the orders could, in fact, have been filled, and that made them legitimate.

The imminent Finra settlement says Mr. Beck is expected to be barred from associating with any Finra member. Besides Finra, the Ontario Securities Commission recently sanctioned Mr. Beck and Swift for not adequately supervising trading to prevent deceptive activities.

The SEC declined to comment. Beck, a Hungarian-born year-old with long salt-and-pepper hair and a penchant for colorful scarves, said overzealous regulators hurt his business with reckless allegations.

He gave up control of the trading operation last year and closed the brokerage firm that is the subject of the Finra settlement. The army of traders, their numbers somewhat diminished, now operate under a company called Calm Oceans LP, which is set up as a hedge fund in the Caribbean island of Anguilla with headquarters in San Jose, Costa Rica.

Its general partner is Mr. Beck also controls a Toronto company called Orbixa Technologies Inc. Beck from associating with any Finra member. Beck arrived in Canada from Hungary as a youth in , working as a short-order cook and a real-estate agent before founding a long-distance telephone company, ITN Corp.

He sold it for several million dollars in and relocated to Paris, but found himself bored and returned to Toronto to launch more businesses, among them one selling Internet pornography. Then one day on an airline flight, he read an article about Internet day trading and decided to build a network for such traders, Mr. Beck said in the interview. In , he and several partners launched Swift in a small office in Toronto. Through computer hookups, it could provide traders with the ability to directly access a cluster of the electronic stock-trading networks that were then popping up.

At first, traders wagered their own money, paying a per-order fee, but Mr. Beck then reorganized the operation. Under the new setup, clients opened remote trading operations in cities such as Rotterdam and Barcelona and provided their own cash to traders.

Swift acted as a trading conduit and provided extra cash, or leverage, so they could amplify their bets. Traders, paid a salary and a slice of their winning trades, would buy stocks and sell them minutes or seconds later in an attempt to capitalize on fleeting moves. It was a Darwinian system. If traders lost a set percentage of the funds they juggled, their terminal would freeze for the day, Mr. And traders who consistently lost were quickly dropped.

Winners, however, could take home tens of thousands of dollars a day. Among the winners, a few spent wildly. Around , a Chinese-Canadian Swift manager opened a branch in Guangzhou, China.

Soon, Swift had dozens of trading rooms in China. Managers tried to keep their locations secret to prevent poaching of traders, mostly young men willing to stay up late at night to trade on U.

Acting as broker for the trades was a firm in Boston called Biremis Corp. Stock exchanges liked the volumes the army of Swift day traders produced. Officials from the major U.

Beck and former exchange officials. There were scrapes with regulators. Though wash sales have no economic value, for which reason they are prohibited in the U. As is typical with such cases, Mr.

Beck says his firm posted a profit every day for about 10 straight years except once when there was a computer glitch. He calls this success a hallmark of a robust risk-management strategy that cuts off traders when they start losing money. Regulatory agencies, however, tend to see never-lose trading a different way, as a red flag. Regulators and stock-exchange market-surveillance officials in the U.

Regulators including Finra and the FSA worked together across borders in looking into Mr. Two months later, Finra in the U. After Swift was dissolved at the end of and Calm Oceans took control of the network, Calm Oceans traded for a short period through a broker in Austin, Texas, called Transcend Capital. Calm Oceans orders from Transcend triggered a number of alerts at Finra flagging potentially manipulative activity, according to a person familiar with the regulator.

Finra sent a team of examiners to look into the matter, this person says, adding that Transcend severed its ties to Calm Oceans.

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The Finra settlement says, among other things, that Mr. Beck says that in the network now, strict controls have been put in place to discourage any manipulative trading activity. For instance, traders have been told not to buy and sell infrequently traded stocks, which are more vulnerable to manipulation. The network of traders is diminished from its glory days, Mr. With a few taps on his keyboard, the trader bought 1, shares of Ford.

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