NASD fines broker $8M
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July 6, 1999: 4:53 p.m. ET
Nasdaq slaps Monroe Parker for bilking clients, inflating warrant prices
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NEW YORK (CNNfn) - The Nasdaq's watchdog arm Tuesday fined Monroe Parker Securities Inc. more than $8 million related to the manipulation of equity prices and the bilking clients four years ago, a scheme that led to millions of dollars in customer losses.
NASD Regulation, the regulatory arm of the National Association of Securities Dealers, found that Purchase, N.Y.-based Monroe Parker and four of its principals sold stock they owned to clients without proper disclosure and cornered the market in one company's warrants in order to inflate the price.
Rory Flynn, chief litigation counsel for the NASD, said the ruling by a NASD panel unveiled Tuesday amounted to "one of the largest fines imposed in a litigated matter" at the association.
Last fall, Monroe Parker's president, Alan Lipsky, and Vice President Bryan Herman pleaded guilty to charges brought by the New York State Attorney General in connection with the case.
They would be able to appeal the fine. However, Monroe Parker's attorney Martin Russo, of MPR Law Practice in New York, could not be reached for comment about whether the firm will file an appeal. Martin Kaplan, Herman's lawyer, refused to comment.
The NASD fined the firm and its principals for two activities. One was a so-called "pump-and-dump" scam and the other involved failing to disclose personal interest principals enjoyed in the sale of a particular stock.
A December 1997 complaint charged that the firm bought 94 percent of Class A warrants of women's shoemaker Steven Madden Ltd., manipulated the price of the warrants and sold them at excessive prices six days after the purchase. These activities allegedly took place in late 1994 and early 1995.
Monroe Parker and its executives allegedly pocketed more than $3 million in profits from the trades -- $1.1 million of which went to both Herman and Lipsky.
A "significant majority" of those warrants were bought from Lipsky and Herman's former employer, Stratton Oakmont Securities Inc., which was barred by NASD Regulation in late 1996.
In a second matter, NASD Regulation said Monroe Parker didn't properly tell customers who bought common stock of United Leisure Corp., an amusement park and day camp operator, that the shares they bought came from the personal accounts of Herman and Lipsky.
Monroe Parker, which has since gone out of business, allegedly recommended those trades. Lipsky and Herman were said to personally profit in the trades by more than $1.3 million.
Also named in the NASD action were Ralph Angeline, the Monroe Parker's director of trading, and director of compliance Richard Levitov. The firm was expelled from the NASD as part of the action.
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