Amex Censures, Fines, and Bars Pasquale Schettino
Nancy A. Condon
Former Specialist Fined $100,000; Barred From Association with Exchange and Member Firms
New York, NY—The American Stock Exchange's Adjudicatory Council ordered that Pasquale Schettino, a former Managing Director of Spear, Leeds & Kellogg and former Amex member and specialist be censured, pay a $100,000 fine, and be permanently barred from association with the Exchange or any of its members or member firms. The Adjudicatory Council, Amex's appellate panel, upheld a decision previously rendered by an Exchange Disciplinary Panel that found Schettino had, as a result of his trading activity, violated the anti-fraud provisions of the federal securities laws and various Amex rules regarding member trading. In addition, the Disciplinary Panel found that Schettino violated the Amex Constitution by making material misstatements during the course of the investigation to Exchange representatives.
The Exchange's action grew out of a lengthy investigation into Schettino's relationship with Bullseye Securities, an Amex member firm, during 1994 and 1995. It found that Schettino participated in stock and options trading for, as well as management of investment activities of, Bullseye Securities, without the required prior approval of his employer or the Exchange. Schettino initiated and effected unlawful stock and option trades while on the Exchange floor for Bullseye accounts, including trades in stocks and options for which he and his firm were the registered specialist. Amex rules prohibit this type of trading to assure that members do not improperly take advantage of trading information received in the course of making a market in stocks in which they are the specialist.
Schettino violated the federal securities laws and various Exchange rules by creating fraudulent profitable stock trades for Bullseye, placing losing trades in another member's account without the member's knowledge or consent, and converting a member's funds for use by Bullseye. Schettino also effected fictitious profitable stock trades for Bullseye in order to enhance the firm's trading equity.
The Panel also found that Schettino opened a fictitious account at Bullseye and permitted another Exchange member to invest, effect trades, and share in the profits of the bogus account. Finally, Schettino made a number of material misstatements to the Exchange staff during the course of its investigation in an effort to conceal his activities and avoid disciplinary action.
The sanctions become final unless Schettino appeals the Adjudicatory Council's decision to the Securities and Exchange Commission within 30 days.
The Nasdaq-Amex Market GroupSM, which operates The Nasdaq Stock Market® and the American Stock Exchange®, is a subsidiary of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry, self-regulatory organization in the United States.