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January 09, 2015 at 09:52 AM
A Financial Industry Regulatory Authority hearing panel on Friday expelled John Thomas Financial, of New York, and barred its CEO, Anastasios “Tommy” Belesis, who appeared in the film Wall Street 2: Money Never Sleeps, from the securities industry for violations in connection with the sale of America West Resources Inc. (AWSR).
The violations involved America West’s common stock, including trading ahead of customers’ orders, recordkeeping violations, violating just and equitable principles of trade, and for providing false testimony, FINRA said.
The panel also jointly and severally ordered JTF and Belesis to pay $1,047,288, plus interest, to customers. Additionally, JTF and Belesis were suspended for two years and jointly and severally fined $100,000, and JTF’s Chief Compliance Officer Joseph Castellano was suspended for one year and fined $50,000, for “harassing and intimidating registered representatives.”
According to FINRA, on Feb. 23, 2012, the price of AWSR common stock spiked approximately 600%, opening at 28 cents per share, peaking at $1.80 per share and eventually closing the day at $1.29 per share. That same day, JTF sold 855,000 shares, the majority of its proprietary position in AWSR, reaping proceeds of more than $1 million.
The FINRA hearing panel found that “JTF and Belesis traded ahead of 14 JTF customers who tried to sell their positions in AWSR, and had profited while customers who had tried to sell AWSR stock had been unable to do so.”
The decision noted, however, that JTF did not intentionally hold customer orders but instead, JTF brokers tried to enter the orders but were unsuccessful in their attempts. FINRA’s rule requires the firm to execute those orders at the same or better price than the firm obtained for itself. In failing to cancel and rebill the proprietary trades, the panel decided JTF and Belesis violated the just and equitable principles of trade rule.
The panel also found that JTF and Belesis failed to keep and maintain records of at least 14 customer orders to sell AWSR received on Feb. 23, 2012. According to the decision, “Belesis testified that he was ‘not familiar’ with the recordkeeping requirements, and claimed that he was unfamiliar even with the fundamental requirement that the firm preserve order tickets for three years.”
The panel noted that it did not find Belesis’ claims of ignorance credible given the length and breadth of his experience in the securities industry, and inferred that “JTF and Belesis either concealed or destroyed those order tickets.”
