NASD Regulation Hearing Panel Expels Monroe Parker Securities and Bars Principals; Fines in Excess of $8 Million Imposed
Nancy A. Condon
Washington, D.C.—NASD Regulation, Inc., today announced the expulsion of Monroe Parker Securities, Inc., Purchase, NY, from membership in the National Association of Securities Dealers, Inc. (NASD®) and imposed a fine of $5.6 million for price manipulation, excessive markups, and other violations following a decision rendered by an NASD hearing panel.
Charged with fraud in connection with the sale of common stock, sanctioned, and fined are the following:
- Alan S. Lipsky. Monroe Parker’s President was barred from associating, in any capacity, with any NASD member and fined (i) $750,000 individually; (ii) $3.16 million jointly and severally with the firm, Bryan J. Herman, and Ralph J. Angeline for profits made trading Steven Madden, Ltd. Class A warrants; and (iii) $1.36 million jointly and severally with the firm and Herman for profits made trading United Leisure Corporation common stock.
- Bryan J. Herman. The firm’s Vice President was barred from associating, in any capacity, with any NASD member and fined (i) $1.1 million individually; (ii) $3.16 million jointly and severally with the firm, Lipsky, and Angeline for profits made trading Steven Madden, Ltd. Class A warrants; and (iii) $1.36 million jointly and severally with the firm and Lipsky for profits made trading United Leisure Corporation common stock.
- Ralph J. Angeline. The firm’s Director of Trading was barred from associating, in any capacity, with any NASD member and fined (i) $600,000 individually and (ii) $3.16 million jointly and severally with the firm, Lipsky, and Herman for profits made trading Steven Madden, Ltd. Class A warrants.
Richard S. Levitov, the firm’s Director of Compliance, was also charged with failure to supervise and barred from associating with any member of the NASD in any principal capacity, suspended in all other capacities for one year, fined $5,000, and ordered to requalify by passing the Series 7 examination before re-associating with any member firm.
Collectively, taking into account that some of the fines have joint and several liability, the total amount imposed is $8,047,692, plus accrued interest. When fines are imposed with joint and several liability, both parties are responsible for the payment of the single dollar amount.
The complaint, filed on December 23, 1997, alleged that during late 1994 and early 1995, Monroe Parker, acting through Herman and Angeline, acquired approximately 94 percent of the Class A warrants of Steven Madden, Ltd. available for public trading. The significant majority of these warrants were acquired from Stratton Oakmont Securities, Inc.—Lipsky’s and Herman’s former employer and a firm expelled by NASD Regulation in December 1996. The hearing panel, comprised of a Hearing Officer and two industry members, found that after acquiring this dominant position, Monroe Parker manipulated the price of the warrants 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 Lipsky and Herman 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 fell from $3.625 to $1.50 per warrant, and its customers lost millions of dollars.
The panel also found that Monroe Parker, Lipsky, and Herman fraudulently failed to disclose interests adverse to those of their customers in connection with the sale of a second security, United Leisure Corporation common stock. Customers who bought United Leisure stock, upon the firm’s recommendation, were not told that the stock came from the personal accounts of Lipsky and Herman (who were previously given the stock at no cost by Monroe Parker, and who sold the stock back to the firm through pre-arranged trades). Lipsky and Herman personally profited from the sales by more than $1.3 million.
The panel additionally found that Lipsky and Levitov failed to supervise the trading and sales activity at Monroe Parker in violation of NASD Conduct Rules.
NASD Regulation oversees all U.S. stockbrokers and brokerage firms with public customers. NASD Regulation and The Nasdaq-Amex Market Group, Inc., are subsidiaries of the National Association of Securities Dealers, Inc., the largest securities-industry self-regulatory organization in the United States.