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Univ. of Toledo College of Law

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Friday, March 6, 2009

SEC Sanctions Brokerage Firm for RR's Manipulation

The SEC issued administrative Orders against Newbridge Securities Corp (Newbridge) and Eric M. Vallejo. The Orders find that in 2003 and 2004, Newbridge and Vallejo failed reasonably to supervise Newbridge registered representative Daniel M. Kantrowitz while Kantrowitz was engaged in the manipulation of two stocks. The Order as to Newbridge further found that Newbridge failed reasonably to supervise Kantrowitz while he was engaged in the unregistered distribution of one of the stocks, failed to supervise other registered representatives who sent emails to customers during the waiting periods of two initial public offerings, and itself violated Sections 5(a) and (c) of the Securities Act of 1933.  Based on the foregoing, the Newbridge Order censures Newbridge and orders it to cease and desist from committing or causing any violations and any future violations of the Sections 5(a) and (c) of the Securities Act; orders the firm to pay disgorgement of $206,711 plus prejudgment interest of $1,722, and a civil penalty of $80,000; and directs Newbridge to comply with an undertaking to retain an independent consultant to review its written supervisory procedures and supervisory systems, and implement changes to those procedures and systems the independent consultant recommends. The Vallejo Order suspends Vallejo from acting in a supervisory capacity with any broker or dealer for a period of nine months; and orders Vallejo to pay disgorgement of $12,919 plus prejudgment interest of $172.79, and a civil penalty of $20,000. Newbridge and Vallejo each consented to the issuance of the Orders without admitting or denying the findings in the Orders. In the Matter of Newbridge Securities Corp., Guy S. Amico, Scott H. Goldstein, Eric M. Vallejo, and Daniel M. Kantrowitz

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Comments


The same day Amico/Newbridge were fined $177,500 for failing to
establish, maintain and enforce a supervisory system reasonably
designed to achieve compliance with applicable rules and regulations,
there was a firm wide memo sent out by Robin Bush regarding "penny
stock" transactions. The memo noted that trading in such securities
would need to be approved by Rick Bush. This was in March of 2008.
Currently both Mr. and Ms. Bush are being investigated by FINRA, not
sure exactly what for. Last I heard Amico and CEO Goldstein were both
appealing this,
http://www.sec.gov/litigation/aljdec/2009/id380jtk.pdf.

I have an email dated 10/31/07 from Nick Schaeferle (he and Amico
signed my contract) that indicated that an order I entered for a
Canadian security was a "penny trade". While I believe this to be the
only printed and/or recorded documentation of the numerous
conversations and emails I exchanged regarding this particular issue,
there were numerous calls and emails (all on my Newbridge email
account, which I have not had access to since 12/30/08) regarding this
particular issue. In June 2007, Newbridge was fined $70,000 and
required to rewrite its WSP for trade-related violations: failed to
accept or decline transactions in eligible NMC (Nasdaq Market Center)
within 20 minutes after execution as the order entry firm; failed to
show terms and conditions, entry time, execution time on brokerage
order memoranda. The main reason I joined Newbridge was because I was
told I would have access to making trades on the Canadian exchanges.
Tom Buddie went as far as saying Newbridge could even make a market
for Canadian security for me when I visited them in March 2007.
Without having access to my Newbridge email account, I'm unable to
pinpoint the exact date when my troubles conducting transactions in
Canadian securities began, but it was before the one email I have
printed out from October 2007. I'm guessing it was a result of the
fines in June 2007. Ironically, this rule became effective September
28, 2007, http://www.complinet.com/file_store/pdf/rulebooks/NASD07-40.pdf,
which addresses transactions in non-exchange-listed securities listed
on a Canadian exchange. The emails and phone conversations numerous
employees of Newbridge in combination with this particular regulatory
notice alone is extremely damaging to the entire firm and especially
the way in which it has responded to regulatory actions.

My contract states that upon termination, Newbridge will not attempt
to assign my account to other persons contracting with Newbridge.
This was sent to a client on 1/5/09:

It was nice speaking to you this afternoon. I am a Senior Vice
President with New Bridge Securities, with over 20 years of investment
experience.
I take this business very serious and will work day and night to
fulfill your needs. I would really like the opportunity to handle your
account. I would like to have another conversation with you to go over
your investment objectives, risk tolerance and time horizon. Each
portfolio I recommend to my clients are custom to there investment
objectives. In today’s environment a buy and hold approach does not
work, especially if you are buying individual stocks. You need to use
stop losses to limit risk. It takes a lot of time, discipline and
research to find the best values while taking the least amount of risk
as possible.

If you can email me back a time for me to call you so I can ask you
some questions before your account transfers out, that would be great.
I believe I can help you. After our conversation, I will give you a
hypothetical portfolio of the investments I would recommend to you.

Thank you in advance.

Thomas Casolaro
Branch Manager

Newbridge Securities Corporation
Phillips Point
777 South Flagler Drive
East Tower - Suite 602
West Palm Beach, FL 33401-6163
Toll Free: 800.497.7318 Direct: 561.655.0188 x209
Fax: 561.655.7556 e-mail: tcasolaro@newbridgesecurities.com


On 2/1/2010, Thomas Casolaro was promoted to Director of Sales at
Newbridge. This is just one of several terms of my contract I feel
Newbridge breached.


I also strongly believe my termination was the result of email
correspondence in which I questioned the strong "BUY" recommendations
being given by superiors at Newbridge in their daily "Squak Box"
sessions in the late summer of 2008. However without access to my
Newbridge email account I do not have any documentation to support
this belief. The market went through a sever sell off the last three
months of 2008, which would validate my questioning.

In addition to the first two paragraphs, there has been various types
of conduct that is prohibited in not only my personal accounts, but
those of clients. The following email
correspondence from July 14, 2009 is somewhat of the tip of the
iceberg in terms of the prohibited conduct I feel has occurred in the
accounts:

Hi ...we are updating the acct and apologize for the
confusion...you should not receive any more stmts...

Take care ...


Thank you...
Georgina Sturdivant
Operations Manager / N.I.S
Newbridge Securities Corp.
1451 W Cypress Creek Rd., Ste 204
Ft. Lauderdale, FL 33309
PH 954 334 3450 ext 161
FX 954 229 9937
- Hide quoted text -

-----Original Message-----

Sent: Tuesday, July 14, 2009 1:07 PM
To: Georgina Sturdivant
Subject:

Hi Georgina, I have a couple questions regarding my June 09 statement
that I was told to ask you about. The first page states that the "Net
Portfolio Assets held at Legent" is $49,350.25, however I was told
that the account has a zero balance. The second page also has the
same figure under the "Held at Legent" column. That discrepancy is my
first question, the second is in regards to a check that was
apparently issued on 6/3/09 in the amount of $1,997.99. Two part
question with the check. I never requested a check from the account
and was wondering why exactly one was issued at the time, and secondly
I never received a check at my Ohio address (which is the address on
the account as well as the statement) or at my California address. So
any pieces you could possibly put together for me of that puzzle would
be of great help. Whenever you have the time, if you could take at
look and see if you are able to come up with any answers to either
issue I would greatly appreciate it.

Thank you so very much. Hope all is well with you.

Take care,


I'm sure at least one of these has occurred,
http://www.finra.org/Investors/ProtectYourself/BeforeYouInvest/ProhibitedConduct/.
However I have questions on more than half of them.
=


Posted by: njc | Jun 19, 2010 9:55:54 AM

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