Man Fined for Stock Markups of Up to 92%

The president of a defunct Huntington Beach securities firm was censured and fined nearly $85,000 Friday by the National Assn. of Securities Dealers for charging markups on stock sales of up to 92%.

Russell E. Glines, 29, was suspended from managing another brokerage house for at least two years. The NASD, a Washington-based regulatory group for the over-the-counter market, said Glines will be permitted to work as a stockbroker--provided he works for someone else.

Glines was president of Baycrest Financial from February, 1988, until September, 1989.

For five months in 1988, Glines sold stock in Exten Ventures, a San Diego merchant bank, for prices 11% to 92% higher than what the securities were trading for on the open market. The NASD claims Baycrest made $98,000 in illegal profits.

Securities and Exchange Commission regulations stipulate that any fee higher than 10% above a stock’s market price is fraudulent.

The NASD said Exten stock was generally selling for less than 80 cents a share during the five months when Giles was selling it, but Baycrest’s customers paid much more. Baycrest handled 154 transactions, ranging in value from $500 to $5,000.

The NASD decided not to revoke Glines’ broker’s license after determining that his actions had been unintentional.

He was “a misguided, inexperienced individual who was not intent on defrauding the public,” the NASD said in its decision.

Glines could not be reached for comment.

Before he ran Baycrest, Glines worked at a Westlake Village securities firm, Westmont Securities Corp., that was later accused by the NASD of the same practices.

“Glines’ six-month introduction to the business occurred at a firm which was later expelled from membership and under the tutelage of an individual who was later barred for excessive markups,” the NASD said.

NASD spokesman Enno Hobbing said excessive markups are an industrywide problem.

“We’ve had quite a few cases like this,” he said.