RD White Brokerage Expelled From Securities Industry by NASD
Washington, Aug. 15 (Bloomberg) -- The R.D. White & Co. brokerage was expelled from the securities industry by regulators for allegedly underpaying individual customers on $2.9 million repurchases of new stock after initial public offerings.
The New York-based firm, which had 47 brokers last year, had paid severalnumerous fines in recent years after being charged with securities violations by the National Association of Securities Dealers and state regulators.
R.D. White's two top executives, Louis J. Pagano and John R. Piscopo, also were suspended from the securities industry for two years and fined a total of $150,000, NASD Regulation said today.
NASD Regulation found R.D. White cornered the market on two stocks it was underwriting on the Nasdaq Stock Market by repurchasing shares from individual investors who obtained the stock before the 1997 IPOs.
The brokerage repurchased the Genisys Reservation Systems Inc. and Capital Beverage Corp. stocks at impermissibly low prices without telling sellers, the regulators said. The two companies weren't accused of wrongdoing.
NASD rules forbid firms from paying less than 95 percent of the market price in buying stocks from customers. R.D. White underpaid sellers on $1.9 million purchases of Genisys stock and $1.0 million of Capital stock, the NASD Regulation found.
Regulators also found R.D. White, after repurchasing the shares, paid its brokers unusually large sales credits for selling the stocks. The firm also drew $1.6 million in undisclosed underwriters' compensation, the regulators said.
Stock Trades
R.D. White induced the stock trades ``by means of manipulative, deceptive or other fraudulent devices,'' NASD Regulation said.
The firm's attorney couldn't be reached for comment.
R.D. White, which was started in 1976, agreed to settle the charges by accepting an ouster from the industry, paying a $100,000 fine and refunding $400,000 to investors.
Last year, the firm's lawyer, Marc D. Power of New York, said, ``The firm's investors never complained.'' He also contended that NASD Regulation's method of calculating alleged underpayments was flawed.
Pagano, R.D. White's owner and chief executive, and Piscopo, the firm's president, were suspended from any work in the securities industry for two years and from working as principals at a firm for five years. Pagano, 56, also was fined $50,000 and Piscopo, 34, was fined $100,000.
R.D. White previously had been fined by the NASD and the states of New Jersey, Oregon, Massachusetts and Connecticut for securities violations.
Regulators have been clamping down on firms' efforts to corner the market in trading of new IPOs.
Aug/15/2000 13:19 ET
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