Investors Allegedly Overcharged Customers $18.7 Million; Four Brokers Facing Charges

by InvestorLawyers on October 25, 2012

in Arbitration,FINRA,New York,SEC,Securities Fraud,Stock Manipulation

According to stock fraud lawyers, four brokers were recently charged by the Securities and Exchange Commission with securities fraud. The SEC’s allegations state that the four brokers illegally overcharged their customers $18.7 million. Reportedly they perpetuated their fraud by keeping a portion of profitable trades executed in customer accounts and using hidden markups and markdowns. The brokers named in the charges are Henry Condron, Benjamin Chouchane, Marek Leszczynski and Gregory Reyftmann.

Investors Allegedly Overcharged Customers $18.7 Million; Four Brokers Facing Charges

The clients of these brokers may have thought they were getting a great deal as, according to the SEC’s complaint, the brokers purported incredibly low commissions, often fractions of pennies or pennies per transaction. However, in actuality, when executing customers’ purchase and sell orders, they were reporting false prices. Reportedly, the hidden markups and markdowns were intentionally charged at times when the market was volatile. Investment fraud lawyers say this made the fraud particularly difficult to detect. The markups and markdowns occurred over a period of four years, involved over 36,000 transactions and ranged from only a few dollars up to $228,000. This resulted in fees that were sometimes altered from what had been reported to customers by over 1,000 percent.

In another part of the scheme, a customer sought to buy shares and specified a limited price. The brokers allegedly filled the order at the maximum price, but sold part of the order in order to obtain a profit for their firm. Next, they informed the customer that they were unable to complete the order at the maximum price set. During this time, millions of dollars were being made by these brokers through performance bonuses based on fraudulent earnings. In total, the brokers received over $15.6 million in performance bonuses, part of which resulted from earnings related to fraud.

The U.S. Attorney’s Office for the Southern District of New York announced a parallel action earlier this month. Chouchane and Leszczynski are facing criminal charges and Condron pled guilty to charges against him.

In total, the scheme allegedly lasted from 2005 until 2009 and profited the firm, in addition to the brokers. Stock fraud lawyers are currently investigating what liability the firm has for the actions of these four brokers.

If you believe you are one of the victims of Condron, Chouchane, Leszczynski and Reyftmann’s trading scheme, you may be able to recover your losses through FINRA arbitration. To find out more about your legal rights and options, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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