Straying pretty far of off topic, but... in the trading house story why not just act as a market maker or counter party? Ignoring the fee structure and leverage

Straying pretty far of off topic, but... in the trading house story why not just act as a market maker or counter party? Ignoring the fee structure and leverage the complaint appears to be that they simply took the deposits and did not actually make trades on behalf of the client. In a private exchange or trading house would it not be as effective for the house, or a “partner”, to selective meet the bid/ask based on the client account? Being generally ignorant Ill assume leaking counterparty information would also fall afoul of regulators?