NASD Charges Gunnallen Broker with Threatening Public Company
Washington, D.C. — NASD announced today that it has charged Shawn Aaron, a stockbroker with Gunnallen Financial, Inc., in Tampa, FL, with attempting to extort and intimidate Optelecom-NKF, Inc. ("OPTC"), a Nasdaq SmallCap company. NASD charged that Aaron threatened to drive down the price of the company's stock from about $13 to $6 per share unless it provided him with confidential business information.
According to NASD's complaint, Aaron purchased Optelecom-NKF shares for his own account in early April 2004. On his recommendation, about 50 of his customers also bought the stock. Together, Aaron and his customers owned more than 134,000 shares by mid-April 2004. At the time, the company had about 3.15 million total shares issued and outstanding.
NASD charged that later that month, Aaron contacted a representative of Optelecom-NKF and falsely stated that he personally owned or controlled 300,000 shares, or 10 percent of the company's stock. Aaron then threatened to drive down the price of the stock to $6 by dumping the shares on the open market unless he were given inside information about the company. Aaron told the company representative that he wanted to work with him to take the company's stock to the next level. To bolster his threat, Aaron falsely stated that he had at times owned substantial shares of other companies' stock, including some in the same general business as Optelecom-NKF, and was instrumental in driving up their stock prices. The company refused to cooperate with Aaron.
NASD said in its complaint that Aaron's misconduct was part of a scheme to defraud Optelecom-NKF by the use of false pretenses and representations, violating NASD rules that obligate brokers to observe high standards of commercial honor and just and equitable principles of trade.
Optelecom-NKF is a Maryland-based company that designs and manufactures communications products that transport data, video, and audio over the Internet and fiber optic cables.
Under NASD rules, a firm or individual named in a complaint can file a response and request a hearing before an NASD disciplinary panel. Possible remedies include a fine, censure, suspension, or bar from the securities industry, disgorgement of gains associated with the violations, and payment of restitution.
Investors can obtain more information about, and the disciplinary record of, any NASD-registered broker or brokerage firm by using NASD's BrokerCheck. NASD makes BrokerCheck available at no charge to the public. In 2004, members of the public used this service to conduct more than 3.8 million searches and request almost 190,000 reports for existing brokers or firms. Investors can link directly to BrokerCheck at www.nasdbrokercheck.com. Investors can also access this service by calling 1-800-289-9999.
NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit our Web Site at www.nasd.com.