US regulators have filed a lawsuit against a former ConvergEx executive, accusing him of playing a key role in a fraudulent scheme reaping millions of dollars from clients by concealing charges.

The Securities and Exchange Commission (SEC) alleges that Kal Bassily, who previously headed up the New York firm’s transition management division, collected hidden profits on clients’ securities trades in a scheme which ran for five years.

It comes after two former executives at State Street were charged by US officials earlier this month for their part in a scheme involving secret commissions within the bank's transition management business.

Both Ross McLellan, who left State Street in 2011 and denies any wrongdoing, and Edward Pennings are due to face charges in a Boston court.

Offered as a service by several major banks, transition management aims to help to institutional clients - often large pension funds - move their investments between and among asset managers or liquidate large portfolios.

Bassily worked at ConvergEx from 2006 until he was fired from the US brokerage in September 2013. 

Three months later, ConvergEx agreed to pay $150m to settle criminal and civil complaints that it overcharged customers.

Back in 2014, SEC officials charged Anthony G. Blumberg, a former executive of ConvergEx Global Markets exec, over securities fraud.  His case is currently pending a New Jersey court.

When it comes to Bassily, the SEC says he took steps to conceal a practice of routing clients' brokerage orders to an offshore affiliate, based in Bermuda, to take hidden charges that were embedded in the price customers paid to buy and sell securities.

The hidden charges, known as "trading profits", were often substantially higher than the commissions paid by customers to have their orders executed.

It is alleged that one customer paid $600,000 in commissions for certain trades placed through CovergeEx's transition management business, but also unknowingly paid $9.6m in hidden TP on those same trades.

According to the complaint, Bassily engaged in, and encouraged others to engage in, "repeated deceptive acts" designed to create a false impression regarding the costs paid by the customers.

ConvergEx is not named in the court suit.