D.H. Blair And Top Officials To Pay $4.9 Million In Fines And Restitution.WASHINGTON--(BUSINESS WIRE)--Aug. 13, 1997--NASD Regulation, Inc., today announced that D.H. Blair & Co. Inc., has been fined $2 million, and will repay almost $2.4 million to investors who were overcharged as the result of excessive mark-ups in 16 securities, and of other fraudulent The description of a willful act commenced with the Specific Intent to deceive or cheat, in order to cause some financial detriment to another and to engender personal financial gain. conduct. D.H. Blair's Chief Executive Officer and Head Trader were also fined a combined $525,000. More than 3,100 retail customers from 43 states including the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). will receive restitution In the context of Criminal Law, state programs under which an offender is required, as a condition of his or her sentence, to repay money or donate services to the victim or society; with respect to maritime law, the restoration of articles lost by jettison, done when the payments from D.H. Blair within 120 days. The overcharging was uncovered after a lengthy investigation by the national NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). Regulation Enforcement Department and its District Offices in Boston and Philadelphia. In their settlement with NASD Regulation, D.H. Blair neither admitted nor denied the allegations that from June 1993 through May 1995 the firm charged excessive markups in 16 Nasdaq SmallCap securities whose Initial Public Offerings (IPOs) were underwritten by D.H. Blair Investment Banking Corp., a formerly related company. NASD Regulation found mark-ups in excess of 10 percent (a level considered fraudulent) had occurred in 14 of the 16 securities in more than 1,100 transactions. D.H. Blair placed virtually all of the offerings with its own customers. In addition, the firm dominated and controlled the after-market trading in all 16 securities, in some cases for up to four and a half months after the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. effective date. NASD Regulation also found that D.H. Blair fraudulently increased the price of two of the 16 securities (Skyline Multimedia and Video Update) shortly after trading began without sufficient purchase orders to support those increases. As a result, D.H. Blair created an artificial "profit" in the securities that allowed the preferred customers of one of the firm's senior managers to benefit by selling their stock back to the firm. Thereafter, D.H. Blair's brokers used the artificial increase to solicit new investors to purchase these securities, without disclosing the circumstances of the price increase. "Every investor, large or small, has the right to expect that the prices they pay for securities are fair and honest. We have the responsibility to make sure that's the case," said NASD Regulation President Mary L. Schapiro. D.H. Blair's Chief Executive Officer Kenton E. Wood was fined $225,000 and suspended in all capacities for 60 days; and Head Trader Vito Capotorto was fined $300,000 and suspended for 90 days in all capacities. Following their suspensions, Wood must retake re·take tr.v. re·took , re·tak·en , re·tak·ing, re·takes 1. To take back or again. 2. To recapture. 3. To photograph, film, or record again. n. 1. his supervisory exam and Capotorto must retake his general qualification exam. Wood and Capotorto are still employed at the firm. D.H. Blair and Wood were cited for inadequate supervision. The 16 securities involved were: Amerigon Corp. common stock; Telepad Corporation units; AquaCare System units; Symbollon Corporation units; Skyline Multimedia units; Linda's Flame Roasted roast v. roast·ed, roast·ing, roasts v.tr. 1. To cook with dry heat, as in an oven or near hot coals. 2. To dry, brown, or parch by exposing to heat. 3. Chicken units; Skysat Communication units; Video Update units; U.S. China Industrial Exchange units; Montbatten common stock; U.S. Diagnostics Labs units; Premier Laser System units; Infosafe System units; In-Time System units; Interactive Flight units; and Sepragen Corporation units. There is no suggestion that the affected companies knew of, or were involved in these violations. As part of the settlement, D.H. Blair is also required to hire an independent consultant to review and monitor the firm's trading, sales, supervision, and other compliance- related policies and practices for two years. This consultant will also recommend necessary improvements, which the firm must implement. For the next year, the firm also agreed not to sell more than 60 percent of a securities offering in which it participates. D.H. Blair will make full restitution of the $2,065,520 it made through the excessive and fraudulent mark-ups, and pay $329,336 in interest to affected customers. D.H. Blair is a New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of City-based broker/dealer firm that has been an NASD member since April 1975. NASD Regulation oversees all U.S. stockbrokers and brokerage firms. NASD Regulation, along with The Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. , Inc., are subsidiaries of the National Association of Securities Dealers National Association of Securities Dealers (NASD) Nonprofit organization formed under the joint sponsorship of the investment bankers' conference and the SEC to comply with the Maloney Act, which provides for the regulation of the OTC market. , Inc. (NASD), the largest securities- industry self-regulatory organization Self-regulatory organization (SRO) Organizations that enforce fair, ethical, and efficient practices in the securities and commodity futures industries, including all national securities and commodities exchanges and the NASD. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Investors who have questions should contact NASD Regulation at (301) 590-6500. CONTACT: Media Contact: Michael W. Robinson (202) 728-8304 Robinsom@nasd.com or Other Contact: Barry R. Goldsmith (202) 974-2850 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion