Charges Filed Against Brokerage Firms That Trade Private Shares The Securities and Exchange Commission announced Wednesday that it filed charges against three firms that trade shares of privately held technology companies: Felix Investments, EB Financial and SharesPost. The S.E.C. said fund managers at Felix and EB Financial misled investors and reaped "undisclosed fees and commissions." SharesPost, an online exchange where private shares are bought and sold, improperly brokered transactions without registering with regulators as a licensed broker-dealer, the agency said. SharesPost and EB Financial have settled the charges, and the S.E.C. is pursuing a legal case against Felix Investments and its chief executive, Frank G. Mazzola. "While we applaud innovation in the capital markets, new platforms and products must obey the rules and ensure the basic fairness and disclosure that are the hallmarks of sound financial regulation," Robert Khuzami, director of the S.E.C."s enforcement division, said in a statement Wednesday. The charges cap a yearlong investigation into the frenzied trading of shares in still-private Internet companies like Facebook and Twitter. In December 2010, the S.E.C. began to look more closely at secondary market trading, which flourished amid rising enthusiasm for the new wave of social media companies. As investors eagerly bought shares in these private start-ups, regulators were scrutinizing brokers and studying how they attracted clients and extracted fees from transactions. According to the charges filed on Wednesday, the S.E.C. has found evidence of brokers misleading investors and cutting hidden fees. In the case of Felix Investments, regulators are accusing Mr. Mazzola and his firm of taking secret commissions from the sellers of private shares, in addition to his firm's disclosed commissions. By taking commissions from both investors and sellers, Felix was not trying to get the lowest prices for its investors, according to the S.E.C."s statement. The S.E.C. also accuses Felix Investments, a brokerage firm based in New York, of misleading investors with false information and selling stakes in one of its Facebook funds without fully disclosing how many shares the fund held. Felix Investments did not immediately respond to an e-mail seeking comment. Laurence Albukerk and his firm, EB Financial, will pay about $310,000 to settle the S.E.C. charges. The S.E.C. also accused Mr. Albukerk of hiding fees from investors and using a separate entity owned by his wife to buy Facebook stock and to resell those shares to EB Funds at a higher price. That system apparently allowed Mr. Albukerk to extract additional profits and hide the costs from investors. "EB Financial Group believes this settlement with the S.E.C. is in the firm's best interests and we are pleased to put this matter behind us," the company said in a statement. Furthermore, based on market prices at the time of their investment and today, each investor's investment in our funds appears profitable. The S.E.C. has also settled its case with SharesPost and its founder, Greg Brogger, over failing to register with the agency as a broker-dealer when it began selling such shares. The company became a broker-dealer in December. "Of the more than 1,500 transactions completed to date, there has yet to be a single customer complaint" to regulators, SharesPost said in a statement. SharesPost can say that it concluded that it better serves its client by entering into this administrative settlement. SharesPost and Mr. Brogger will pay a total of $100,000 in penalties. "The newly emerging secondary marketplace for pre-I.P.O. stock presents risk for even savvy investors," Marc Fagel, director of the S.E.C."s San Francisco office, said in a statement. Broker-dealer registration helps ensure those who effect securities transactions can be relied upon to understand and faithfully execute their obligations to customers and the markets.