Sentra Securities Is Named in Complaint Involving 3 Clients
Sentra Securities Corp., a San Diego-based securities broker-dealer, has been named in a civil complaint filed against three Sentra clients who have admitted to using an insider tip to benefit from stock market trades made on Aug. 20, 1986, the Securities and Exchange Commission said Thursday.
The SEC action, filed earlier this week in U.S. District Court in New York, does not charge Sentra with wrongful conduct. However, it does demand that Sentra turn over profits generated by the illegal stock market trades.
In a prepared statement released Thursday, Sentra officials denied any wrongdoing.
The SEC action alleges that Ann Stephenson, a former vice president of public affairs with Beneficial Corp., alerted her brothers, Richard Strasburg and Frederick Strasburg, to the fact that Beneficial’s stock would soon increase in value.
That increase was anticipated because New York-based Allegheny Corp. had just requested SEC approval to acquire 15% of the Wilmington, Del.-based company’s voting stock.
The SEC complaint alleges that Stephenson leaked word to her brothers that Beneficial had ordered its investment bankers to study various measures--including the sale of all or some of Beneficial’s businesses.
The brothers used that information to acquire 6,925 shares of Beneficial common stock through Sentra at prices ranging from $46.125 to $46.375, according to the complaint.
Beneficial’s common stock rose to $74 per share after Allegheny’s intentions were publicly announced. The Strasburgs then ordered Sentra to sell all but 1,000 of their Beneficial shares, the complaint alleges.
However, the Strasburgs later ordered Sentra to rescind the trades.
Sentra instead placed the already completed trades into one of its own accounts and also sold the 1,000 shares to earn an even greater profit, according to the complaint.
Sentra “does not believe the action . . . is well taken,” according to a company news release.
Sentra officials who told the SEC about the Strasburgs’ rescission order were advised by the SEC to “retain the funds,” according to the release. “Subsequently, questions were raised by the SEC concerning those funds,” the release added.
The SEC on Thursday asked the court to appoint an escrow agent who would “submit a plan for distributing the profits” held by Sentra.
Stephenson and the Strasburgs have admitted to violating SEC regulations, according to the complaint. They each have signed agreements that prohibit further violations of SEC stock-trading regulations.