NASD Regulation Sanctions Eight Former Monitor Investment Group Executives and Brokers for Manipulative and Deceptive Practices
Nancy A. Condon
(202) 728-8379 (202) 974-2850
Washington, D.C.—NASD Regulation, Inc., today announced that eight individuals previously associated with Monitor Investment Group, Inc. (Monitor), including the firm’s president and two other principals, have been fined a total of $750,000, and permanently barred or suspended from the securities industry.
After a 14-day hearing, an NASD Regulation Hearing Panel imposed these sanctions on the following individuals named as a result of their participation in a fraudulent stock manipulation scheme which violated federal securities laws and NASD rules:
- John Montelbano, former president of Monitor and general principal, was permanently barred from the securities industry and fined $90,000;
- Michael Galasso, Jr., former trader at Monitor and registered representative, was permanently barred from the securities industry and fined $130,000;
- Emmanuel Gennuso, former operations and compliance officer of Monitor and general principal, was permanently barred from the securities industry and fined $215,000;
- Gerald McMahon, former research analyst of Monitor and registered representative, was permanently barred from the securities industry and fined $90,000;
- Patrick Giglio, registered representative, was permanently barred from the securities industry and fined $80,000;
- Steven Goldstein, registered representative, was permanently barred from the securities industry and fined $50,000;
- Dwayne Leverett, general principal, was suspended from associating with any member of the NASD for 120 days, fined $55,000, and ordered to requalify by passing the Series 7 and 63 examinations within 90 days of the Panel's decision becoming final and the Series 24 examination within 180 days of the Panel's decision becoming final; and
- Todd Nejaime, registered representative, was suspended from associating with any member of the NASD for 90 days, fined $40,000, and ordered to requalify by passing the Series 7 and 63 examinations within 90 days of the Panel's decision becoming final and the Series 24 examination within 180 days of the Panel's decision becoming final
The Hearing Panel determined that, in connection with Monitor’s sale of the common stock of Accessible Software, Inc., the named eight individuals engaged in a scheme which ultimately resulted in a "massive fraud" being perpetrated on the investing public. The Panel found that John Montelbano, Emmanuel Gennuso, Michael Galasso, and Gerard McMahon implemented a scheme to manipulate the stock’s price and distribute the shares to Monitor’s customers at predetermined prices. Critical aspects of the scheme were found by the Hearing Panel to have included exploiting Monitor’s position as the stock’s only market maker to illegally raise the per share price from $1 to $6 3/4 over a two-hour period, encouraging Monitor’s sales force to make misrepresentations and baseless predictions to their customers, and manipulating the market to create an artificial demand for the stock.
The Hearing Panel also found that Patrick Giglio, Steven Goldstein, Dwayne Leverett, and Todd Nejaime engaged in manipulative and deceptive sales practices during their sales of the manipulated stock. These individuals were found to have sold the stock to their clients at predetermined prices that had no relation to market forces and failed to disclose to investors the brokers’ excessively high commissions. Giglio, Goldstein, and Leverett also were found to have made baseless performance predictions to their customers. In addition, Galasso and Gennuso were found to have excessively and fraudulently marked up the price of the stock, charging customers undisclosed markups from 10 to 74 percent on their purchases.
The Hearing Panel also found that Galasso created false and fictitious records; Gennuso, Leverett, and Montelbano failed to prevent, detect, or correct the illegal conduct; and Gennuso permitted an unregistered individual to act as a broker. Further, Galasso, Gennuso, Giglio, Leverett, McMahon, Montelbano, and Nejaime obstructed NASD Regulation’s investigation by lying to and concealing information from NASD Regulation staff.
A decision involving the firm and nine other individuals charged in the original action has not yet been rendered. Those individuals include: Michael Cavallo; James Garcia; Scott Herkert; Norman Lescht; William Palla; Salvatore Piazza; Jeffrey Pokross; Salvatore Ruggiero; and Edward Telmany.
Accessible Software, Inc. (ASWE) is not a party to this action and there are no allegations or findings that it or its officers knew that its shares were being manipulated or were in any way involved in illegal conduct.
Monitor was based in Pennsylvania but conducted most of its business through three branch offices located in New York City. The firm withdrew its membership from the National Association of Securities Dealers, Inc. (NASD®) in October 1996.
Unless the matter is appealed to NASD Regulation’s National Adjudicatory Council (NAC), or called for review by the NAC, the hearing panel’s decision becomes final after 45 days. The sanctions imposed by the Hearing Panel are not effective during this period. If the decision is appealed or called for review, the sanctions may be increased, decreased, modified, or reversed. Each individual may choose to appeal the decision.
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 NASD, the largest securities-industry self-regulatory organization in the United States.