NASD Regulation Charges Security Capital Trading and Exec
With Unjustified Termination Of Firm Commitment Underwriting
For Release:
Contact: Thursday, August 16, 2001
Nancy A. Condon
202-728-8379
NASD Regulation Charges Security Capital Trading and Exec
With Unjustified Termination Of Firm Commitment Underwriting
Washington, D.C. — NASD Regulation, Inc., today announced that it has charged Security Capital Trading, Inc., and its President, Ronald Heineman, with violating NASD rules when they improperly terminated a firm commitment to underwrite an initial public offering (IPO). The firm currently does business under the name Vertical Capital Partners, Inc. and is located in New York, NY.
In its complaint, NASD Regulation charged that Security Capital was the lead underwriter for Galacticomm Technologies, Inc.’s September 23, 1998, $11 million IPO. The offering consisted of 1.8 million common shares priced at $6 per share and a similar number of warrants priced at 10 cents each. The complaint alleged that after the first four days of trading the stock and warrants on the Nasdaq SmallCap Market, Security Capital, through Heineman, unilaterally and without justification, terminated the IPO. Galacticomm was forced out of business, in part, due to the loss of the IPO proceeds. NASD Regulation charged that Security Capital did not observe high standards of commercial honor and just and equitable principals of trade when they terminated the firm commitment made to Galacticomm. According to the complaint, the termination adversely affected over 500 customers and numerous brokerage firms and their clearing agents when trades had to be unwound and canceled.
NASD Regulation further alleged that Timothy Ryan, a registered representative formerly associated with Security Capital, violated NASD rules and federal securities laws by entering purchase orders for customers who had not authorized them. Those orders were entered as part of the IPO.
This case was investigated by NASD Regulation’s Enforcement Department with assistance from the Corporate Financing Department.
The issuance of a disciplinary complaint represents the initiation of a formal proceeding by NASD Regulation and does not represent a decision as to any of the allegations contained in the complaint. Because this complaint is unadjudicated, the respondents should be contacted before drawing any conclusion regarding the allegations in the complaint.
Under NASD Regulation rules, the individuals named in the complaint can file a response and request a hearing before an NASD Regulation disciplinary panel. Possible sanctions include a fine, suspension, bar, or expulsion from the NASD.
Investors can obtain more information about NASD Regulation as well as the disciplinary record of any NASD-registered broker or brokerage firm by calling (800) 289-9999, or by sending an e-mail through NASD Regulation’s Web Site www.nasdr.com.
NASD Regulation oversees all U.S. stockbrokers and brokerage firms. NASD Regulation, The American Stock Exchange®, and NASD Dispute Resolution, Inc. are subsidiaries of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry self-regulatory organization in the United States.
nasdr.com |
