Re: AS Goldmen news articles
NASD Regulation Fines A.S. Goldmen & Co. $200,000 And Orders $1 Million-Plus In Restitution To Customers; President, Vice President, And Trader Also Sanctioned NASD Regulation ordered A.S. Goldmen & Co., Inc., to pay a $200,000 fine and more than $1 million in restitution and interest to more than 500 customers in at least 35 states.
Three of A.S. Goldmen's officials were also sanctioned. President and owner Anthony J. Marchiano was suspended from the brokerage industry in all capacities for six months, fined $50,000, and censured; Vice President Stuart E. Winkler was suspended for two years, fined $50,000, and censured; and trader Stacy Meyers was suspended for 90 days, fined $5,000, and censured. All three must retake their exams to re-enter the brokerage industry.
After an eight-day hearing, NASD Regulation's District 10 Business Conduct Committee (DBCC) found that the Iselin, N.J.-based A.S. Goldmen manipulated the price of warrants in Innovative Tech Systems Inc., received excessive underwriting compensation, charged its customers excessive mark-ups in connection with the initial aftermarket trading of the warrants, and did not
adequately supervise its staff to prevent these violations. The manipulation and the overcharging, which occurred over a four-day period from July 26 through July 29, 1994, resulted in more than $1 million in illicit profits.
NASD Regulation found no evidence that Innovative Tech Systems, which was (and still is) listed on Nasdaq's Small Cap Market at the time, knew that the price of its shares was being manipulated.
The abuses at A.S. Goldmen were uncovered by a lengthy NASD Regulation investigation by the Market Regulation and Enforcement Departments, and the District Offices in New York and Denver.
NASD Regulation found that A.S. Goldmen controlled the supply of Innovative Tech's warrants, through its own accounts and its customers' accounts, immediately following the company's Initial Public Offering (IPO) on July 26, 1994.
Prior to the IPO, Innovative Tech provided 1.3 million warrants to 21 bridge financiers. Within the first two hours of trading on July 26th, A.S. Goldmen purchased most of the 1.3 million warrants held by the bridge financiers below quoted prices. By adding these warrants to the almost 1.8 million remaining warrants held by the firm in its customers' accounts, A.S. Goldmen dominated and controlled the market for Innovative Tech's warrants.
A.S. Goldmen artificially increased the warrant's price to almost $2 per share, more than a 700 percent increase over the offering price. As a result, customers were charged mark-ups of 5 to 140 percent. NASD Regulation considers mark-ups in excess of 10 percent to be fraudulent.
NASD Regulation found that even though A.S. Goldmen was only one of 12 market makers in Innovative Tech, sales between the firm and its customers accounted for approximately 97 percent of all the warrants traded.
A.S. Goldmen was also found to have violated NASD rules and federal securities laws that prohibit any firm from simultaneously bidding for and purchasing a security while distributing it.
In addition, A.S. Goldmen received more than $750,000 in excessive underwriting compensation. NASD rules set strict limits on the permissible level of underwriters' compensation.
NASD Regulation found the following violations:
- Anthony J. Marchiano failed to supervise.
- Stuart E. Winkler engaged in manipulative trading while the firm was distributing the warrants, charged fraudulently excessive mark-ups, charged excessive underwriting compensation, and failed to supervise.
- Stacy Meyers charged excessive mark-ups.
Initial actions, such as this, by an NASD Regulation DBCC are final after 45 days, unless they are appealed to NASD Regulation's National Adjudicatory Council (NAC), or called for review by the NAC. The sanctions are not effective during this period. If the decision in this case is appealed or called for review, the findings may be increased, decreased, modified, or reversed.
In this case, the more than 500 investors will receive restitution payments from A.S. Goldmen within 120 days of the final decision.
© 1998, National Association of Securities Dealers, Inc. (NASD). All rights
reserve
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AS Goldmen, Executives Charged With $100 Mln Fraud
Washington, July 8 (Washington) -- A.S. Goldmen & Co., a defunct brokerage, and 33 of its executives and employees were charged by New York or federal authorities with manipulating small-company public offerings, costing investors $100 million in trading losses.
Manhattan District Attorney Robert Morgenthau brought criminal charges against New Jersey-based A.S. Goldmen, its president Anthony J. Marchiano, and a Goldmen financial principal and former supervisor for the National Association of Securities Dealers, Stuart E. Winkler, along with a group of former brokers and other employees of the firm.
Several separate indictments were handed down, covering 240 counts, including
charges of enterprise corruption, scheming to defraud investors, criminal possession of stolen property and money laundering. The individuals face up to 25 years in prison each, Morgenthau's office said.
The Securities and Exchange Commission also charged A.S. Goldmen, Marchiano, and Winkler in a civil administrative case with manipulating shares in at least six initial public offerings that the brokerage underwrote from 1994 to 1998.
'We will spare no effort to close the doors of 'boiler rooms' that fraudulently peddle stocks to unsuspecting investors and tarnish the reputation of our capital markets,' said SEC Enforcement Director Richard Walker.
'Personal Tragedies'
At a press conference in his lower Manhattan office, Morgenthau said, 'A lot of these losses were personal tragedies for the people involved.' One Maryland couple lost $400,000, he said, and a woman who had set aside $25,000 for her daughter's wedding lost it all.
In its heyday, A.S. Goldmen had offices in Manhattan, Naples, Florida, and Iselin, New Jersey, with nearly 100 brokers and 50,000 accounts, prosecutors said. The firm was created in 1988 and effectively shut down last fall after authorities searched its offices.
Winkler, who was a field supervisor in the NASD's New York office about 20 years ago, helped Goldmen conceal its misdeeds from federal and state regulators, Morgenthau said.
The charges stem from the firm's sale of 10 securities: Millennium Sports Management Inc., Stadium Capital Inc., Independence Brewing Co., Imatec Ltd., Wanderlust Interactive Inc., Winfield Capital Corp., Veritas Music Entertainment, Nickelodeon Theatre Co., Cinema Ride Inc. and Innovative Tech Systems Inc.
'Boiler Room'
In its complaint, the SEC alleged A.S. Goldmen, Marchiano and Winkler sold 3 million unregistered shares of Millennium Sports, raising $7.5 million for the firm. A.S. Goldmen's Naples, Florida office then became a 'boiler room' that used aggressive sales practices to sell the Millennium securities, the SEC alleged.
The SEC also charged six other former brokers who worked in Goldmen's Florida or New Jersey offices with securities violations. They are John T. Diasabeyagunawardena, John P. DelCioppo, Christopher M. DelCioppo, Vincent J. Lia, Duane Taylor and Charles Trento.
'The actions by the SEC and the criminal authorities today were overreaching,' said Seth Taub, a lawyer representing John DelCioppo. Authorities are seeking to sanction 'many more people' than they'll be able to prove cases against, Taub said.
Lawyers for the firm and other individual defendants either couldn't be reached for comment or didn't return calls.
According to the SEC, A.S. Goldmen, Marchiano, Winkler and the other brokers
participated in five stock fraud schemes from 1994 to 1998.
One of them involved six IPOs underwritten by A.S. Goldmen, the SEC complaint said. Winkler placed IPO shares into four nominee accounts, then had A.S. Goldmen immediately buy those securities after the IPO, making at least $25,000 for the Winkler nominee accounts, the SEC charged. A.S. Goldmen and Winkler would then resell the securities to investors at even higher prices, the SEC said.
Hearing Planned
An administrative law judge will hold a hearing to determine whether the SEC
allegations are true and whether sanctions, including fines, are appropriate.
The district attorney also charged A.S. Goldmen's vice president, Salvatore Marchiano, Anthony Marchiano's brother, and senior brokers Charles Principato, Stephen Kaplan, John Messina, Michael Cimli and Paul Cimli, among others.
Paul Cimli and another salesman, Paul Colontino, had other people take their licensing exams for them, Morgenthau said. The 33 people charged by Morgenthau's office are scheduled to appear today in New York State Supreme Court in Manhattan.
The district attorney's office previously charged two former A.S. Goldmen brokers last November.
The NASD in May charged the firm, Marchiano, and Winkler with manipulating the securities of Innovative Tech Systems, a Pennsylvania software company. The firm was ordered to pay a $150,000 fine and more than $500,000 in restitution to customers. Marchiano was fined $150,000 together with the firm and Winkler was fined $36,000, according to the NASD.
Jul/08/1999 19:48
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(C) Copyright 1999 Bloomberg L.P.
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Brokerage Indicted in Stock Fraud
By The Associated Press
NEW YORK (AP) -- A Florida securities firm and 33 people have been accused of committing massive stock fraud against thousands of investors and cheating them out of almost $100 million.
Indictments announced Thursday in Manhattan allege that A.S. Goldmen of Naples, Fla., and the individual defendants bilked investors by lying to them, performing unauthorized trades, ignoring sell orders, forgery, and
outright theft.
Some investors, mostly elderly, were persuaded to get as much cash as possible from their credit cards, or withdraw money from retirement accounts, to invest with Goldmen. Virtually all of that money was lost.
District Attorney Robert Morgenthau said many people were irreparably hurt. For example, a 73-year-old retiree who lost his life savings had to return to work as a bus driver, Morgenthau said.
Morgenthau said Goldmen, which was started in 1988 and at its peak in 1994-95 had more than 300 brokers and 50,000 customer accounts in Iselin, N.J., and Naples, Fla., was created to steal money from investors.
Morgenthau said the firm committed crimes in almost every area of the securities business. He said they artificially drove stock prices up and down, used insider information for trades, charged excessive markups on stocks, used high-pressure tactics, lied, and used unlicensed salesmen.
Two defendants controlled Goldmen's activities, Morgenthau said. They are Anthony Marchiano of Naples, Fla., Goldmen's president and sole shareholder, and Stuart Winkler of Morganville, N.J., the firm's chief
financial officer.
Winkler is a former official of the National Association of Securities Dealers, which regulates the securities industry, and therefore knew many ways to help Goldmen hide its wrongdoing, Morgenthau said.
The indictment charges Goldmen with crimes from July 1994 to June 1998. Daniel Castleman, head of Morgenthau's Investigations Bureau, said the statute of limitations bars charges for earlier crimes.
The defendants, all from New York, New Jersey, Connecticut or Florida, are charged variously with enterprise corruption, grand larceny, scheme to defraud, falsification of business records, money laundering,
and related crimes.
A.S. Goldmen is no longer in business, and the defendants, who are all in custody, were unavailable for comment.
Morgenthau said his office has begun civil court proceedings to recover $99,269,688 as the proceeds of the defendants' criminal acts.
A temporary restraining order prohibits the defendants from disposing of any assets and directs banks and other institutions to freeze defendants' assets, he said.
nytimes.com
Sweet Home Alabama
July 11, 1999
MARKET WATCH
On the Seamier Side of the Bull Market
By GRETCHEN MORGENSON
Another day, another $100 million lost by investors to securities fraud.
An exaggeration, of course. But judging from the cases streaming out of prosecutors' offices recently, it seems as if securities fraud rivals the Internet as the nation's hottest growth industry.
On Thursday, a small brokerage firm called A. S. Goldmen and 33 individuals associated with it were indicted on charges of securities fraud. Robert M. Morgenthau, the Manhattan District Attorney, said investors lost $100 million with the firm. Goldmen employees committed just about every bad act in the book, he said, including stock manipulation, lying to investors, unauthorized trading and forgery of documents. The lawyer for the firm's owners said they would be exonerated.
The growth in securities cases has kept Morgenthau's office humming. In the past 18 months, he has brought nine cases against 94 individuals. Nor is the problem limited to New York. Investor inquiries and complaints to the Securities and Exchange Commission rose 11.6 percent last year.
There's a simple reason for a bull market in fraud -- the bull market in stocks. Investors hearing of wondrous sums made in the market are eager to generate their own profits and easily gulled about what they can expect an investment to earn. When the Standard & Poor's 500 rises more than 20 percent for five consecutive years, it's easier to believe a crook's claim about doubling your money on a hot stock.
Greed, of course, is at the bottom of these mishaps. But many crooks are so good at their craft that even a hardened skeptic might be convinced. Besides, who doesn't want to increase profits?
Consider the story that Viva Wolhar, a teacher in Newark, Del., says she told the prosecutors. When an A. S. Goldmen broker called her in late 1997 with an investment idea, she thought it might bolster the $9,000 she had saved for her daughter's wedding and the $25,000 she had in a retirement account.
"I was told they were going to build a golf stadium in Naples with the money and that they had the sanction of the senior tour," she recalled. "It seemed to make sense to me." She lost $33,761.
Clearly, investors are vulnerable today. Which makes a proposal to reduce registration requirements for brokers -- made by the Securities Industry Association, Wall Street's lobbying group -- puzzling at best. Senator Phil Gramm, the Texas Republican who ischairman of the Banking Committee, is looking at whether to include it in his Securities Markets Enhancement Act of 1999.
The proposal would change the current state-by-state registration system for stockbrokers, allowing a broker to operate nationwide as long as he or she was cleared in one state. Stuart Kaswell, general counsel of the industry group, said it would eliminate redundancy.
But state securities regulators say it would encourage scofflaw brokers to set up operations in the state with the smallest regulatory staff and then make cold calls to investors across the country.
Joseph P. Borg, director of the Alabama Securities Commission, said 75 percent of brokers registered in Alabama are from out of state. In the last 18 months, his staff questioned the applications of some 350 brokers; 300 of them withdrew. "Under this proposal, I'll have no gatekeeping function." he said.
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BN NASD Employees Probed Over Leaks to Brokerage Firm, WSJ Says
Jul 18 1999 23:49
New York, July 19 (Bloomberg) -- The Manhattan district attorney is scrutinizing whether National Association of Securities Dealers employees with access to secret documents helped a brokerage firm evade regulators, the interactive edition of the Wall Street Journal reported, citing people close to the situation. It is examining how internal documents, including an 'investigative game plan,' got into the hands of officers of A.S. Goldmen & Co. while the NASD was investigating Goldmen. The possibility that Goldmen received inside help is the latest twist to the investigation of alleged penny-stock fraud at the now-inactive firm, the newspaper said. The Naples, Florida brokerage firm was indicted this month along with 33 individuals, accused of defrauding investors of nearly $100 over three years ago.
(The Wall Street Journal Interactive 7/19 www.wsj.com)
--Abigail Wyatt in the London newsroom (44 171) 330 7321/cp
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