NASD Regulation Charges Monroe Parker Securities, Inc., Principals With Manipulation, Fraud, And Excessive Markups
Washington, D.C.—NASD Regulation, Inc., today announced that it issued a complaint on December 23, 1997 charging Monroe Parker Securities, Inc., its Vice President, Bryan Herman; and its Head Trader, Ralph Angeline; with price manipulation and excessive markups in the trading of Steven Madden, Ltd. Class A Warrants. The firm and Herman, together with Monroe Parker's President, Alan Lipsky, were also charged with fraud in connection with the sale of common stock of United Leisure Corporation.
The complaint alleges that during late 1994 and early 1995, Monroe Parker, acting through Herman and Angeline, acquired approximately 94 percent of the Steven Madden warrants available for public trading. The significant majority of these warrants were acquired from Stratton Oakmont Securities, Inc.—Herman's and Lipsky's former employer. After acquiring this dominant position, Monroe Parker allegedly manipulated the warrants' price and, within six days, sold its entire inventory to its retail customers at fraudulently excessive markups.
More than $3 million in profits were made from these fraudulent trades—more than $2 million were made by the firm, while Herman and Lipsky personally profited by an additional $1.1 million. Once these profits were made, Monroe Parker no longer had an interest in artificially supporting the price, and reduced its bid for the security. Within a week, the price of the warrants fell from $3.625 to $1.50 and its customers lost millions of dollars.
The complaint also charges Monroe Parker, Herman, and Lipsky with fraud in the sale of a second security, United Leisure common stock. As alleged in the complaint, customers who purchased United Leisure stock, upon the firm’s recommendation, were not told that the stock came from the personal accounts of Herman and Lipsky (who were previously given the stock at no cost by Monroe Parker). Herman and Lipsky personally profited by more than $1.3 million.
The issuance of a disciplinary complaint represents the initiation of a formal proceeding by the Association in which findings as to the allegations in the complaint have not been made and does not represent a decision as to any of the allegations contained in the complaint. Because this complaint is unadjudicated, you may wish to contact the respondents before drawing any conclusion regarding the allegations in the complaint.
In the complaint, NASD Regulation asks that the respondents give up the profits that were illegally obtained and make restitution to defrauded investors. Other potential sanctions include a fine, suspension, individual bar, or firm expulsion from the NASD. Under NASD Regulation rules, the individuals and the firms named in the complaint can file a response and request a hearing before an NASD Regulation disciplinary panel.
Investors can obtain the disciplinary record of any NASD-registered broker or brokerage firm by calling (800) 289-9999.
NASD Regulation oversees all U.S. stockbrokers and brokerage firms. NASD Regulation, and The Nasdaq Stock Market, Inc., are subsidiaries of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry self-regulatory organization in the United States.