finra

FINRA

For Release:
Contacts:

November 8, 2012
Michelle Ong (202) 728-8464
Nancy Condon (202) 728-8379

 

Hudson Valley Capital Management and Mark Joseph Gillis Action

 

FINRA Expels Hudson Valley Capital Management and Bars CEO for Defrauding Clearing Firm and Customers

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has expelled NY-based Hudson Valley Capital Management and barred Chief Executive Officer, Mark Gillis, from the securities industry for defrauding its clearing firm and customers by using their funds and securities to cover losses caused by Gillis' manipulative day trading.

 

FINRA found that in 2012, Hudson Valley, acting through Gillis, used the firm's Average Price Account to improperly day trade millions of dollars of stock. Gillis then manipulated the share prices of these stocks and withdrew the proceeds of his day trading through accounts he controlled. When Gillis' fraudulent trading caused significant losses in the firm's account, he covered those losses by making unauthorized trades involving customer accounts. Gillis purchased thousands of shares of securities in the open market in the firm's account and allocated these shares to customers at markups between 177 percent and 280 percent. Gillis also converted a customer's funds to pay for an unauthorized stock purchase and caused another customer to sustain a loss of approximately $400,000. When confronted about unauthorized trades that occurred in their accounts, Gillis lied to two customers about the transactions to hide his misconduct, and lied to FINRA staff during sworn testimony.

 

Cameron Funkhouser, Executive Vice President of FINRA's Office of Fraud Detection and Market Intelligence, said, "FINRA strives to quickly address egregious broker misconduct. In this instance, FINRA fully investigated Mr. Gillis and Hudson Valley Capital Management within weeks of Gillis perpetrating his fraudulent scheme, and obtained evidence that led to the disciplinary action announced today."

 

Hudson Valley failed to supervise Gillis' trading activities at the firm; thus, Gillis was able to conduct his fraudulent trading scheme without restriction. Gillis' scheme caused a net capital deficiency for Hudson Valley in excess of $350,000.

 

FINRA's investigation was conducted by the Office of Fraud Detection and Market Intelligence, the Department of Member Regulation Sales Practice and the Department of Enforcement.

 

Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2011, members of the public used this service to conduct 14.2 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999. Investors may find copies of this disciplinary action as well as other disciplinary documents in FINRA's Disciplinary Actions Online database.

 

FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.