Among recent enforcement actions by the Securities and Exchange Commission were charges against the former financial operations principal of a bank for misuse of “plug” entries and a settlement with VimpelCom Ltd. over allegations it bribed an Uzbek official.
In addition, FINRA barred one broker, suspended and fined his supervisor and sanctioned another broker in a case of market manipulation.
FINRA Bars Broker for Market Manipulation
The Financial Industry Regulatory Authority has barred broker George Johnson from the securities industry for manipulating the market price and trading volume for the common stock of IceWEB Inc.
FINRA also sanctioned Christopher Wynne, Johnson’s supervisor, suspending him for two years in all capacities, barring him in a principal capacity, and fining him $25,000. Joseph Mahalick, another broker who worked with Johnson and Wynne, was suspended for six months and fined $20,000 for falsifying firm records and has been barred from the securities industry in a separate action. Johnson, Wynne and Mahalick all worked for Meyers Associates L.P. in that firm’s Chicago branch office during the time period of the misconduct.
According to the agency, over an eight-day period, Johnson manipulated the market for IWEB by recommending that some of his customers buy at increasingly higher and artificially inflated prices while also recommending his other customers sell their shares, frequently matching trades between the customers.
Among Johnson’s motives for manipulating the stock was his desire to get business from the issuer, for which he would anticipate receiving compensation in connection with a future private offering. Johnson coordinated a campaign with a stock promoter to attempt to increase the stock’s share price to a level that would allow for the exercise of certain warrants.
Johnson and Wynne sent customers IWEB sales materials that omitted information concerning material conflicts of interest and material risks concerning IWEB’s business, and contained misleading, exaggerated and unwarranted information. Johnson also disclosed confidential information to potential purchasers concerning another offering.
In addition to the IWEB scheme, FINRA found that Johnson committed fraud by recommending that some of his customers buy shares of another penny stock without telling them he was liquidating his own personal positions of the stock from his own brokerage accounts.
To cover up Johnson’s violations, Johnson, Mahalick and Wynne agreed to enter false information on more than 100 order memoranda, indicating that Wynne or Mahalick was responsible for the account or transactions instead of Johnson.
Johnson, Wynne and Mahalick neither admitted nor denied the charges but agreed to the sanctions.
SEC Charges Former Bank Officer on ‘Plug’ Entries