ALEX, your pal: "J. Alexander Securities, Inc. (CRD #7809, Los Angeles, California), Richard Leon
Newberg (CRD #346857, Registered Principal, Golden Beach, Florida), and Dennis
Jay Sturm (CRD #1407180, Registered Principal, Coral Springs, Florida) were
named as respondents in an NASD complaint alleging that the firm, Newberg,
and Sturm participated directly, or indirectly, in undertakings involving the
purchase of securities from issuers with a view to the distribution of such
securities and, thereby, acted as underwriters of the unregistered shell company
and surviving entity securities. The complaint also alleges that this trading,
including matched trades, in the securities of the shell companies created
the false appearance of trading volume and market interest in the securities;
induced other market makers to enter quotes; and allowed the respondents to
artificially affect the market price for the securities. The complaint further alleges
that the respondents, by the use of any means, instrumentality of interstate
commerce, or of the mails, knowingly or recklessly engaged in manipulative or
deceptive devices or contrivances in connection with the purchase or sale of
securities, and knowingly or recklessly effected transactions in, or induced the
purchase or sale of, securities by means of manipulative, deceptive, or other
fraudulent devices or contrivances. In addition, the complaint alleges that the
respondents aided and abetted the manipulative trading of others. The complaint
alleges that Sturm, acting on behalf of the firm, certified that no one associated
with the firm was directly or indirectly affiliated with the issuer when he knew,
or should have known, that controlling shareholders were related to the
respondents or other associated persons of the firm and falsely represented that
the initial prices were based on trades with third-party brokers, unsolicited third-
party transactions, or similar representations.
Moreover, the complaint alleges that Sturm and Newberg maintained, controlled,
or had financial interest in accounts at other firms; failed to provide written
notice of these accounts to the firm; and failed to provide prompt written notice
to the firm that they were engaged in outside business activity for compensation.
The complaint also alleges that Newberg provided false testimony during an
NASD investigation. In addition, the complaint alleges that the firm failed to
supervise the trading and market making activity conducted by Sturm and
Newberg; failed to devise, maintain, and enforce written supervisory procedures
designed to focus on the potential for manipulation presented by trading
securities in newly trading shell companies and failed to oversee the selection of
companies in which the firm made markets and for which it filed Form 211
applications, or to review the accuracy and adequacy of the information in the
Form 211 applications. (NASD Case #CAF010011) |
