NASD Regulation's National Adjudicatory Council Sanctions Former Monitor Investment Group Executives
Nancy A. Condon
Washington, D.C. — NASD Regulation's National Adjudicatory Council (NAC) today affirmed a NASD Regulation, Inc. Hearing Panel's decision to permanently bar from the securities industry John Montelbano, Gerard McMahon and Michael Galasso, Jr., who were previously associated with Monitor Investment Group, Inc. The bar of all three respondents was based on their manipulation of the market in connection with Monitor's sale of the common stock of Accessible Software, Inc.
Following their appeal of the Hearing Panel’s decision, the NAC affirmed the Panel’s findings that Montelbano, Galasso and McMahon participated in a fraudulent stock manipulation scheme that violated federal securities laws and NASD rules. The NAC imposed the following sanctions for the manipulation and other violations:
- John Montelbano, former acting 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 $91,000;
- Gerald McMahon, former research analyst of Monitor and registered representative, was permanently barred from the securities industry and fined $90,000.
After calling the case for review as to the findings and sanctions against two other Monitor employees, Dwayne Leverett and Todd Nejaime, the NAC dismissed the charges that Nejaime had engaged in manipulative and deceptive trading practices and that he had failed to testify truthfully during NASD Regulation's investigation. The sanctions imposed upon Nejaime were set aside. With respect to Leverett, the NAC affirmed the Hearing Panel’s findings that he failed to take any action to detect, prevent, or remedy the manipulation and that he failed to testify truthfully during NASD Regulation’s investigation. The NAC also found that Leverett had assisted in the falsification of order tickets by reviewing and approving altered order tickets that Monitor produced to NASD Regulation during its investigation (reversing the Hearing Panel's dismissal of the charge). The NAC dismissed the charges that Leverett had engaged in manipulative and deceptive trading practices and that he had failed to produce for NASD Regulation original order tickets. The NAC imposed the following sanctions on Leverett: a two-year suspension from associating with any member of the NASD, plus a suspension for 45 business days from associating with a member of the National Association of Securities Dealers, Inc. (NASD®); a $25,000 fine; and a requalification requirement as a general securities principal and a general securities representative.
Accessible Software, Inc. 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 NASD in October 1996.
Each respondent may appeal the NAC's decision to the Securities and Exchange Commission within 30 days of the date of the decision.
The NAC is a 14-person committee that meets regularly to decide appeals from disciplinary, membership and exemption decisions; rule on statutory disqualification applications; and other policy matters. Council members serve two-year terms, and represent an equal mix of industry and non-industry members.
Investors can obtain the disciplinary record of any NASD-registered broker or brokerage firm by calling 800-289-9999, or by sending an e-mail through NASD Regulation’s Web site.
The National Association of Securities Dealers, Inc., is the largest securities-industry, self-regulatory organization in the United States. It is the parent organization of NASD Regulation, Inc.; the American Stock Exchange, LLC; and NASD Dispute Resolution, Inc.