As recently reported, the Financial Industry Regulatory Authority (“FINRA”) barred broker John Phillip Correnti (CRD# 5319471) in light of his failure to provide testimony and documents in connection with an investigation into potential violations of applicable securities industry rules. Publicly available information through FINRA indicates that, in a career spanning 2007 – 2016, Mr. Correnti was previously affiliated with four different brokerage firms. Most recently, Mr. Correnti was associated with AXA Advisors, LLC (“AXA”) (CRD# 6627) (2015-2016).

FINRA records also indicate that Mr. Correnti was the subject of a customer dispute in 2011, which concerned allegations of mismanagement, misrepresentations, breach of fiduciary duty, as well as claims grounded in negligence / negligent misrepresentation. Furthermore, FINRA records indicate that Mr. Correnti was discharged from his employment with AXA in July 2016, following allegations concerning “[h]is apparent involvement in the possible manipulation of a low-price security.”

In August 2017, Mr. Correnti, who worked as a registered representative for AXA in Cleveland, Ohio, was barred from the securities industry by FINRA. Specifically, FINRA sanctioned Mr. Correnti with an industry bar following his failure to completely respond to FINRA’s request for documents, as well as his incomplete testimony. In addition, FINRA records suggest that the investigation was aimed, at least in part, on whether Mr. Correnti “[e]ngaged in undisclosed business activities….”

Publicly available information suggests that Mr. Correnti may have been involved in “possible manipulation of a low-price security.” According to the Securities and Exchange Commission (“SEC”), a penny stock generally refers to a security issued by a very small company that trades for less than $5 per share. Penny stocks are typically quoted over-the-counter (“OTC”) for trading purposes, meaning these stocks trade over a decentralized market. Prices of penny stocks may be susceptible to price manipulation due to the relatively low trading volumes in their shares.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in recovering funds on behalf of investors who have incurred losses as a result of alleged misconduct by their financial advisor and/or brokerage firm. Investors may contact our office at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

In one recent scalping scheme, securities fraud charges were filed by the Securities and Exchange Commission (“SEC”) against John Babikian, the promoter behind AwesomePennyStocks.com and PennyStocksUniverse.com. Both websites are affiliated microcap stock promotion websites and are known collectively as “ABS.” The SEC charges allege that Babikian engaged in scalping through the websites.

According to the SEC, on February 23, 2012, the websites sent emails to around 700,000 people, recommending investing in a particular penny stock, America West Resources Inc. (AWSRQ). However, the fact that Babikian held over 1.4 million shares of America West was not disclosed in the email, nor was the fact that he had positioned the shares for immediate sale via a Swiss bank.

Reportedly, the emails caused a significant increase in America West’s share price and trading value. Babikian then made more than $1.9 million when he unloaded the stock during the last hour and a half of the trading day. Before February 23, America West was low-priced and thinly traded, but on that day more than 7.8 million shares of the stock were traded and the share price was greatly increased. According to investment fraud lawyers and the SEC, if it hadn’t been for the emails, the stock would have been sold at a much lower price, and Babikian wouldn’t have been able to sell more than a few thousand shares in one day.

If you believe that you’ve been the victim of scalping, you may be able to recover your losses through a securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

“The SEC suspended trading in the securities of 61 empty shell companies that are delinquent in their public filings and seemingly no longer in business based on an analysis by the SEC’s Microcap Fraud Working Group,” SEC officials stated in a statement. “Since microcap companies are thinly traded, once they become dormant they have a great potential to be hijacked by fraudsters who falsely hype the stock to portray it as a thriving company and coerce investors into ‘pump-and-dump’ schemes.” Reportedly, these companies were identified in 17 states and one foreign country. Following this suspension, these companies are required to prove they are still operational with updated financial information. However, securities arbitration lawyers say that while these companies became useless to fraudsters once they were suspended, it is difficult for them to identify every shell company that is a possible tool for fraud in time to prevent fraud from occurring. According to investment fraud lawyers, in a pump-and-dump scheme, fraudsters will use false and misleading statements to sell investments in the company, purchasing the stock at a low price, “pumping” the price of the stock higher and then selling the stock at a profit. Previously, the SEC suspended 379 such companies in one day, making this the second-largest suspension in history. A complete list of the 61 companies can be found on the SEC’s website. If you were persuaded to invest in any of these companies by your broker or financial adviser, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

A FINRA statement alleged that Mr. Belesis “(1) willfully or recklessly sold a substantial portion of a firm proprietary position while failing to execute customer orders to sell shares of the same stock, at prices that would have satisfied the unexecuted customer orders; (2) failed to follow instructions by the customers to sell the shares; (3) used manipulative, deceptive and/or fraudulent means to artificially inflate the price of the stock; (4) made material misrepresentations, to customers, registered representatives and FINRA, about the reasons why the customer orders had not been executed; (5) falsified or failed to preserve the orders in question and other pertinent records; and (6) failed to reasonably supervise the receipt, documentation and execution of the customer orders.” Securities arbitration lawyers are conducting their own investigation into the sales practices of John Thomas Financial, based on FINRA’s claims.

Bloomberg reported that Belesis has also been accused of fraud related to America West Resources Inc. According to FINRA, John Thomas Financial raised $20 million for America West from 2008 to 2011. Investment fraud lawyers say that when America West stock rose significantly in February 2012, Belesis allegedly prevented customers from selling their shares while he instructed an employee to sell the firm’s stock, gaining the firm over $1 million in proceeds. John Thomas Financial allegedly attempted to disguise the alleged fraud by “losing” the customer order tickets. Currently, no decision has been made in this case.

If you suffered significant losses as a result of your investment with John Thomas Financial, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

According to FINRA’s findings, in 2012, Hudson Valley, through Gillis, improperly day traded stock worth millions using the firm’s Average Price Account. Following the improper trades, Gillis manipulated the stocks’ share prices and withdrew his day trading proceeds using accounts under his control. Following significant losses caused by this fraudulent trading, Gillis made unauthorized trades in customer accounts in order to cover the losses. Thousands of shares in securities were purchased by Gillis and then allocated to customers at excessive markups from 177 percent to 280 percent. In addition, he paid for an unauthorized purchase of stock by converting customer funds. One customer suffered losses of around $400,000 because of Gillis’ fraudulent activity.

When two customers became aware of unauthorized trading in their accounts, they confronted Gillis, who attempted to hide his misconduct by lying to them. He later lied during sworn testimony to FINRA staff. Investment fraud lawyers stress to investors the importance of diligently monitoring their accounts and statements for fraudulent activity. If investors suspect unauthorized trading or any other type of securities fraud has occurred in their accounts, they should contact a securities fraud attorney immediately.

If, after reviewing your account statements, you believe your representative broker or firm has committed fraud through unauthorized trading, you may be able to recover your losses through securities 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.

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.

The new role of mathematicians in the stock market includes tracking patterns in trading, predicting market movements with formulae and finally using algorithms that trade automatically according to triggers derived from that information. HFT, or High Frequency Trading, is a term becoming common and refers to these quantitative trading programs.

Quant trading can be fully automated or overseen by an individual. In addition, while some quant trading occurs in seconds, it can also take the traditional days, weeks or months. One of the most impressive characteristics of quant trading is its ability to switch strategies in less than a second.

In the United States, two private HFT companies, Getco and Tradebot, account for about 1/5 of all equity trading. With these two companies doing 15 to 20 percent of the market trades, the assumption is that HFT is extremely profitable.

A study done in the UK found many of the effects of quant trading to be positive, asserting that it improved liquidity and helped reduce costs without hurting overall efficiency of the market. However, the same study highlighted self-reinforcing feedback loops, a major concern of HFT. Self-reinforcing feedback loops are a concern because they occur when a small trigger leads to a large overall impact because of a chain of events that amplifies the original effect. As a significant example, the study cites the “Flash Crash” of May 2010 in which, within five minutes, the U.S. market fell by 700 points. However, when the systems were overridden, putting human beings in charge once more, it only took a half hour for the market to bounce back.

The key problem with HFT, according to some, is that mathematicians do not take into account the irrational human behavior that often accompanies trading; because they deal in absolutes, they cannot understand markets. Furthermore, mathematics cannot completely account for the complexities of supply and demand.

While it is the hope of some that HFT will reduce stock broker fraud, in can increase market volatility; investors should be aware of what it is and how it influences the market they are immersed in.

Banks and other members of exchanges, along with broker-dealers, are being asked by the Financial Industry Regulatory Authority (FINRA) to hand over their high-frequency trading strategies and/or the software code so that the agency might watch for unusual trading patterns. Proponents of high-frequency trading claim that these strategies tighten the spread of market prices, but FINRA is concerned that they could hide potential market abuse.

FINRA, along with other securities authorities, has been trying to evaluate how high-frequency trading affects capital markets, and this request for strategy details and software code is just one more step toward that end. It would be possible for this technology to manipulate share prices, and so it is necessary for authorities to evaluate potential threats to prevent market abuse.

A worldwide concern, the European Securities and Market Authority, launched a probe into automated trading firms five months ago, requesting the same information now being requested by FINRA. The SEC is following a similar course of action, though they describe high-frequency trading as “not yet clearly defined.”

Executive vice-president of FINRA’s market regulation unit, Tom Gira, assures the public that requests for this information are not without cause and are usually in response to complaints. Because of the complexity and the massive amount of information sent by algorithms, market abuse is becoming increasingly more difficult to identify. Possible manipulation strategies that could result from high-frequency trading are quote stuffing, layering and spoofing. As FINRA collects more information from firms and broker-dealers, the public could see a rise in securities arbitration dealing with high-frequency trading schemes.

While Bunda neither admitted nor denied the allegations against him, he did consent to FINRA’s ruling.

“This case underscores FINRA’s commitment to aggressively pursue disciplinary actions for manipulative trading schemes that undermine legitimate trading activity,” says FINRA Executive Vice President of Market Regulation Thomas Gira. “Bunda’s conduct was designed to artificially move the market for his own personal gain and demonstrates an unsuccessful attempt to conceal improper trading activity through non-disclosure of outside brokerage accounts.”

“Spoofing” involves improving the National Best Bid or Offer for a security by placing small limit orders at certain prices. This allowed Bunda to take advantage of improved prices by placing larger orders at one of his other eleven firms and then canceling the initial order. According to FINRA’s findings, Bunda entered more than 4,000 of the initial small share orders using his Great Point Capital LLC trading account and bought and sold shares in his undisclosed accounts over 400 times. His total gain was $171,740.

Though Bunda will be able to return to trading after 16 months, FINRA’s disciplinary ruling will be recorded and available to anyone who searches for Bunda using FINRA’s BrokerCheck. BrokerCheck is a free service that provides investors with the disciplinary record of any FINRA-registered broker or firm. BrokerCheck is available toll-free by phone or online at www.finra.org/brokercheck.

In 2005, Forbes Magazine nicknamed Mandell Wall Street’s “bad boy broker” and it’s no wonder, with the bad publicity Sky Capital has received. A Forbes article released in July of 2011 by Walter Pavlo describes “the low bar of becoming a stockbroker” at Sky Capital. McKyle Clyburn, a witness at Mandell’s trial, described how he lied about his name, age and “pretty much everything” when first becoming a stock broker and then found himself a home at Sky Capital — despite his aversion to reading and writing and his drug abuse — making sometimes as much as $750,000 a year. He also stated that using margin trades to burn through a client’s money to earn himself commissions was common at Sky Capital. Clyburn is one of four former Sky Capital employees to plead guilty to criminal charges and then testify to their broker misconduct at Mandell and Harrington’s trial.

The trial lasted five weeks and testimonies like Clyburn’s exhibited the kind of lifestyle that Sky Capital brokers enjoyed at the expense of their clients. According to the Wall Street Journal, evidence introduced by prosecutors also showed that over $162,000 of Sky Capital investors’ money went to “adult entertainment expenses.” Attorneys for both Mandell and Harrington say they will appeal.

Mandell and Harrington have not yet been sentenced and were taken into custody pending U.S. District Judge Paul Crotty’s delayed decision.