Head of New York-based firm led scheme to sell shares at inflated prices, says regulator.
Finra has expelled New York-based Hallmark Investments, Inc. and barred its CEO Steven G. Dash, in connection with a scheme to sell shares of stock to customers at fraudulently inflated prices.
The Financial Industry Regulatory Authority Inc. also suspended Hallmark representative Stephen P. Zipkin for two years and required him to pay more than $18,000 in restitution to affected customers. According to Finra's BrokerCheck, at least 53 people maintained their broker registrations through Hallmark at some point.
Finra said in a release that it found that Hallmark, Mr. Dash and Mr. Zipkin used manipulative trading and misleading trade confirmations to sell nearly 40,000 shares of Avalanche company stock that the firm owned to 14 customers at fraudulently inflated prices.
At Mr. Dash's direction, Finra said, Hallmark used a pre-arranged trading scheme to sell these shares to the customers at $3 per share when the public offering price for the shares was just $2.05 per share. Hallmark sold Avalanche shares to other customers at prices as low as 80 cents, Finra said.
Neither Hallmark nor Messrs. Dash and Zipkin ever disclosed to the customers that the shares they were purchasing belonged to Hallmark, that the firm was charging extraordinary mark-ups on the transactions, that the firm was selling Avalanche shares to other customers during the same period at much lower prices, or that the shares could be purchased for substantially less on the open market, Finra said.
In addition to the charges related to Avalanche stock trading, Hallmark and Mr. Dash were charged with failing to respond to numerous requests from Finra for documents and information, and failing to maintain required minimum net capital.
In settling this matter, the firm and Messrs. Dash and Zipkin neither admitted nor denied the charges, but consented to the entry of Finra's findings.
