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Finra Expels Advice Firm and Bars CEO for Fraud

By Alex Padalka August 15, 2017

Finra has expelled a wealth management firm, barred its chief executive and suspended a rep over allegations of stock sales at fraudulently inflated prices, the industry’s self-regulator says in a press release.

New York-based Hallmark Investments, its representative Stephen Zipkin and its CEO Steven Dash allegedly manipulated trading and supported their fraudulent stock purchases with misleading trade confirmations, Finra says in a press release.

In all, they peddled close to 40,000 shares of Avalanche stock to 14 clients, according to the regulator. Dash allegedly instructed Hallmark to go by a pre-arranged trading methodology to sell shares owned by Hallmark at $3 per share, Finra says in the press release. The public offering price for the shares at the time was $2.05, while Hallmark sold some of its shares to clients at $0.8 per share, according to the press release.

The firm, its CEO and Dash failed to disclose to customers that the shares were available at a significantly lower price either on the open market or through the firm, the regulator says. Finra also charged Hallmark and Dash for failing to answer several requests for information, according to the press release.

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In addition to his suspension, Zipkin must pay more than $18,000 in restitution to clients affected by the scam and remain suspended for two years, Finra says.

Susan Schroeder, Finra’s head of Enforcement, says the watchdog’s recent action is due to its increased focus on high-risk brokers, according to the press release.