How the Mob Makes Money on Wall Street
TRADING SCAMS
THE BOX: Mob-affiliated traders control the market for a stock and its price by trading it among themselves--enforcing their control through bribery, violence, and intimidation. They then unload the stock on the public at an inflated price and, sometimes, sell it short to profit when the shares go bust.
REGULATION S: Through offshore accounts, Mob members illegally buy cheap stock issued under Regulation S of the securities laws--supposedly reserved only for foreign investors. The cheap stock is sold on the open market at vast, riskless markups.
FLIPPING: Mobsters, through front men, quickly unload, at inflated prices, stocks that are the subject of hot IPOs issued by firms they control.
BROKERAGE SCAMS
HIDDEN OWNERSHIP: Through front men who have no criminal records, the Mob controls, or has hidden ownership stakes in, at least two dozen NASDAQ brokerage firms.
TRIBUTE: Mob members get kickbacks from brokerages for protecting them from shakedown attempts by other mobsters.
EXTORTION: Mobsters, working with short-selling confederates, demand payments in return for not shorting the stocks issued by penny-stock and microcap brokerages.
DATA: BUSINESS WEEK
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