TRAV, was The Donald (B) of this ilk?: "Broker With Problems? Become a Stock Flack: Pop quiz: What do the over-the-counter stocks of a hair care company, a playing card distributor and a cigar machine franchiser have in common?
Answer: They're all being touted on the Internet by former
stockbrokers with blemishes on their regulatory records.
As regulators crack down on problem brokers -- and as the
public increasingly foils bad brokers by checking them out for
disciplinary problems first -- the former-stockbroker-turned-
flack has emerged as the latest pusher of investment ideas.
''It's a true enforcement problem,'' says Philip Feigin,
executive director of the North American Securities
Administrators Association. ''There are a lot of people who have
found the money so alluring that they find a way to remain
connected.''
Stockbrokers with problems in their public record always
have the option of second careers in telemarketing, pest control
and organized crime. True aficionados of the market, though,
can't resist the attraction of a job related to Wall Street. Much
to the frustration of regulators, many settle into spots in the
unregulated world of public relations, where they continue to
push stocks of public companies -- and in some cases get
commissions based on the number of shares credited to them --even
though they technically are no longer brokers.
''I'm not sure there's much a regulator can do,'' says
Harvey Pitt of Fried, Frank, Harris, Shriver & Jacobson, a firm
that specializes in securities law.
'Unworthiness'
The investor relations company Strategic Investors Group of
Fort Lauderdale, Florida, is a case in point. It drums up
interest in fledgling companies under the direction of Donald P.
Visco, who in 1988 was denied a license by Florida regulators
''predicated upon the determination that his disciplinary history
within the securities industry constitutes prima facie evidence
of unworthiness'' to be a broker.
Visco, who says he was named Southeast Financial Consultant
of the Year by one of the two major brokerage firms he worked
for, says regulators ''shouldn't be worried about me'' because
''all our companies are thoroughly checked'' by an investment
banking firm that subsequently engages Visco for the marketing
effort.
He says that he could have become licensed in Florida if he
had agreed to be put under special supervisory status, but chose
not to.
Charges on his record of unsuitability and misrepresentation
about limited partnership investments were the fault of ''bad due
diligence'' by his employer, Visco says, referring to four
actions against him by investors who bought partnerships and
other securities. One of the four is pending, according to
Visco's records. The other three were settled.
'If They Ask'
Asked if he reveals his history to the bosses of the
companies he promotes, Visco says he would ''if they asked me.''
While he does not take the initiative to disclose the negatives
on his regulatory record to client companies, he boasts that he
will aggressively expose any client's financial weaknesses on
stratego.net, the Internet page he is setting up, for all
prospective stock buyers to see. ''If everything is up there,
there can't be any denying they didn't know or didn't see it,''
he says. Too bad the same doesn't apply to his clients.
Then again, to tell clients about his own record might set
an uncomfortable precedent that would require disclosure about
his employees. And that would not be helpful in the case of Scott
Raider, vice president of sales and trading working for Visco.
Raider, a former Merrill Lynch & Co. broker, consented in
1989 (without admitting or denying guilt) to a National
Association of Securities Dealers censure and a penalty for
selling a ''hot issue'' initial public offering to a person who
was restricted from owning shares of Reebok, the stock in
question. Separate from that, his records state that ''Raider was
terminated when it came to management's attention that he had
removed approximately $75,000'' from an account without an
investor's permission. Regulatory records say the latter was
referred to the Federal Bureau of Investigation.
'Plea-Bargained'
In an interview, Raider said he did not take $75,000 from a
customer's account, but that he is bound by a settlement
agreement not to tell what happened. ''I plea-bargained the thing
so it would go away,'' he said. Asked if his past might rightly
give pause to those who do business with him in the securities
industry, Raider quotes a familiar disclaimer. ''Past performance
has nothing to do with future results,'' he says.
If that's so, it's a particularly good thing for Visco. His
previous employer, the Fort Lauderdale Hawke Group Inc., itself
includes a key player with a less-than-pristine past. Roy Samuel,
president and chief operating officer of The Hawke Group, became
the subject of a Securities and Exchange Commission investigation
of trading activities in 1993, according to his regulatory
records.
Revoke and Review
Those records say that Samuel got involved in private
securities transactions and outside business affiliations without
the knowledge of his company, Burnett Grey & Co., an Atlanta
brokerage that was suspended from NASD membership in 1994 and had
its license revoked by the SEC in 1995. Burnett said in Samuel's
records that it had launched an internal review into Samuel's
activities; Samuel wrote in his official records that he was not
aware of an investigation by the SEC, and that he did not know
what Burnett was talking about.
Visco, Samuel's former colleague, left The Hawke Group to
set up Strategic Investors Group on Nov. 18, taking with him
several of Hawke's clients. (Hawke still represents DeMert &
Dougherty Inc., a hair care company, Silver Star International,
which distributes playing cards, and International Industries,
Inc., franchiser of Mr. Cigar vending machines).
But that is not to say they parted on bad terms. Several
hours after interviewing Visco and Raider, I called Samuel and
introduced myself as a reporter for Bloomberg News, only to have
him interrupt.
''I know, and you want to write about stockbrokers who have
been censured and fined and are now promoting stocks on the
Internet, and I don't want to be part of your article, thank
you,'' he said. And hung up.Susan Antilla " |
