somebody sent me the following private message about the crooks that run wall street...and you (generic "you"..not you LG) are going to try to tell me that people who do these kinds of things arent going to try to manipulate the market..ROFLMAO
2 articles and a link]Posted at 2:37 p.m. EDT Wednesday, September 16, 1998
NASD fines Donaldson, Lufkin for trading stock during halt
WASHINGTON -- (AP) -- Donaldson, Lufkin & Jenrette Inc. was fined $100,000
by securities regulators for allegedly trading a company's stock during a mandatory
trading halt.
NASD Regulation, the self-policing arm of the National Association of Securities
Dealers, said Wednesday it also censured the New York-based brokerage firm, which
neither admitted nor denied wrongdoing.
Company spokeswoman Catherine Conroy had no immediate comment.
The Nasdaq Stock Market and the New York Stock Exchange halted trading in the
stock, which was not named, from Jan. 29 to Jan. 31, 1997, because of news that the
company planned to restate its earnings.
During the halt, Donaldson, Lufkin & Jenrette arranged buy and sell orders for some
6.5 million shares of the stock on behalf of 29 customer accounts, NASD Regulation
said.
It said the firm transmitted the buy and sell orders, which had been matched up, to an
offshore brokerage firm that completed the transaction. Because the second firm was
outside the United States, it was not required to belong to the NASD and to follow the
group's rules.
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D.A. IS BIDDING TO FIX BROKER
By WILLIAM SHERMAN
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D.H. Blair, the booming Wall Street brokerage house, is being investigated for
allegedly defrauding thousands of investors through manipulative sales and trading
practices, The Post has learned.
As part of the investigation, the Manhattan district attorney's office is focusing on a
team of Blair brokerswhose clients include organized-crime figures - among them, John
Gotti's son-in-law, Carmine Agnello, sources said.
The main thrust of the probe, sources said, is Blair's financing, promotion and trading
of new stock issues that resulted in artificially inflated prices for customers.
Blair is one of the nation's biggest underwriters of initial public offerings (IPOs) for
risky start-up companies with little in the way of assets or earnings.
In one case alone, the National Association of Securities Dealers found that more than
3,100 investors in 43 states - including New York - were "defrauded and
overcharged" in a series of stock sales.
At the same time, sources said, the Blair operation grossed millions of dollars in
commissions and fees, and preferred customers and insiders allegedly were steered
into big profits.
The DA's criminal investigation is a departure from the "usual fine 'em and let them stay
in business" enforcement effort by state and local regulatory agencies, a source
stressed.
"What do ^brokerages_ care about fines?" asked the source. "They can pay whatever
and keep on going. They laugh at the fines."
Informed sources said the DA's probe encompasses:
The financing of numerous Blair underwritings and the firm's control over pricing,
trading and sales of stock to the public through often aggressive "cold calling"
telemarketing campaigns.
Allegations that Blair & Co. brokers, and brokers at other firms, created an artificial
demand for various stocks by promoting one another's underwritings to the investing
public.
Allegations that favored customers and associates, including brokers at other
companies, made big profits on various IPOs at the expense of the general investing
public.
Favored customers, it is alleged, were "taken out" of various stocks when Blair & Co.
still controlled trading, while others who held onto the stock suffered tremendous
losses.
Information provided by seven former employees who pleaded guilty in an unrelated
securities fraud case and are cooperating with investigators in return for lenient
sentences.
As part of the probe, sources said, the DA's office has subpoenaed the trading records
of a number of brokers, including Alfred Palagonia, a 31-year-old senior vice president
who heads the Blair & Co. team that dealt with Agnello and other organized-crime
figures.
But a source noted that the Palagonia team's client list and dealings are just one facet of
the DA's probe.
"It's not a crime to be somebody's broker - no matter who they are," said the source.
"The big concentration, including the look at Palagonia and his records, is on an alleged
company-wide pattern of stock manipulation and price fixing that hurt a lot of investors
in the long run."
He said the probe is targeting both Blair & Co. and its sister firm, D.H. Blair
Investments Corp., both located at 44 Wall St. Blair Investments Corp. underwrites
new issues and Blair & Co.'s retail brokers sell them to the investing public.
In addition to the DA's investigation, sources said federal and state prosecutorial
agencies are looking into Palagonia's activities and the Blair operation in ongoing
probes of stock manipulation and mob relationships with brokerage houses.
Blair & Co., its executives and brokers have a long regulatory history that includes
citations and fines for insider trading, artificially inflating stock prices, impeding a New
York Stock Exchange probe, conducting a false and misleading stock promotion,
unauthorized trading in elderly clients' accounts, and illegally using lists of big-buck
presidential-campaign contributors to solicit new customers.
The CEOs at the two interlocking firms have been cited as well. J. Morton, Davis, of
Blair Investments, was censured for insider-trading violations and transferring
unregistered stock between customer accounts; and Kenton Wood, of Blair & Co.,
was fined $225,000 by the NASD last August for a massive stock-price manipulation.
Davis and Wood declined to be interviewed about the DA's investigation. Instead, they
asked for a list of written questions.
In their responses, faxed by a spokesman, they said they were not aware that they had
clients associated with organized crime.
The DA's office said it is policy to "cooperate with any inquiries" from regulatory and
law-enforcement agencies, "but not to comment on them."
The office's faxed reply, aside from providing routine information about the Blair
operation, was not responsive to The Post's questions.
Palagonia, one of Blair's biggest moneymakers over the last seven years, declined to
be interviewed by The Post.
His lawyer, Stanley Arkin, said Palagonia "is a big producer, a good guy, but when
you're a big producer on Wall Street, you often fall under scrutiny."
Arkin added, "He is not connected to organized crime."
He said Palagonia began a "leave of absence" last Monday - just days after The Post
questioned Blair & Co. about the investigation.
Arkin refused to say anything further about his client or the DA's probe.
Sources said Agnello's personal broker at Blair & Co. is James Pavinoli, a member of
Palagonia's team. Pavinoli did not return The Post's calls.
Agnello, who is married to Gotti's daughter, Victoria, declined an interview through his
lawyer Marvyn Kornberg, who said, "My client will not discuss any investments he
may or may not have."
Blair Investments Corp. is wholly owned by Davis. In 1992, Blair & Co. split off and
is now owned by Davis family members and several key employees.
Davis, an extraordinarily wealthy man who once considered buying the NFL's Miami
Dolphins, gives massive sums to charity and to the Republican Party. He is part owner
of The Hill, a Washington-based publication that covers Congress.
Earlier this year, he devised and successfully lobbied for a change in the new tax law
that favors small-cap IPO investors. The measure was supported by members of both
major political parties.
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Copyright (c) 1997, N.Y.P. Holdings, Inc. All rights reserved. Reproduction in whole
or in part in any form or medium without express written permission of the New York
Post is prohibited.
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