SEC Tackles Wachovia Insider:
The SEC announced in June that it filed a complaint in Illinois District court against Mark Michel, a Wachovia Securities broker, and four other men, Matthew Roszak, Douglas Jozwiak, Darrin Edgecombe and Trifon Beladakis, alleging unlawful insider trading in the securities of Blue Rhino Corp. According to the SEC complaint, Roszak, the CFO of a Blue Rhino-owned company, tipped the others about an impending merger with Ferrellgas Partners. It further alleges that Michel, the Wachovia broker, bought $90,000 of Blue Rhino stock with his own money, borrowed $70,000 from a client to purchase more — violating firm rules — then bought $1.2 million more of the stock for relatives and Wachovia customers. The commission's investigation in the matter is ongoing.
Supervisory Meltdown:
The NASD fined LaSalle Street Securities, an Elmhurst, Ill., firm, $200,000 for failing to supervise Frank Devine, a former LaSalle rep who began serving a 13-year prison sentence in May for defrauding investors with a Ponzi scheme. A federal judge also ordered Devine to pay roughly $3 million in restitution to his victims. Gerald Martin, the LaSalle principal assigned to supervise Devine, has been fined $5,000, suspended for 90 days and barred from serving any such role at any firm in the future. “Devine's misconduct escaped detection in large part because of the firm's deficient supervisory system and procedures,” said James Shorris, head of NASD Enforcement. NASD found that in June 1998, when LaSalle hired Devine, he informed the firm that his previous employer was investigating him for engaging in unauthorized business activities. Despite being aware of this, and despite the fact that Devine maintained a separate business account and operated various outside businesses, LaSalle allowed him to work from his home with no on-site supervision.
Market Timing Geeks:
The SEC has revoked the registration of Geek Securities, a Florida-based broker/dealer, and Geek Advisors, its registered investment advisor counterpart, for pervasive market timing and late trading on behalf of institutional clients. According to the commission, two Geek advisors used various deceptive activities to evade detection of ongoing market timing and accepted trade instructions after the 4 p.m. closing. Both companies consented to the commission's order without admitting or denying the guilt.
