NASD Regulator, FBI Probe Firms for Mob Ties
A self-policing organization for securities dealers, together with the FBI, is investigating 19 companies whose stocks were allegedly manipulated by organized crime, the head of the group told Congress.
The regulatory arm of the National Assn. of Securities Dealers Inc., which owns the Nasdaq Stock Market, has had “significant ongoing investigations of our own” into the companies and several allegedly mob-related brokerages, Mary Schapiro, the president of NASD Regulation, said in a letter to Rep. John Dingell of Michigan, the House Commerce Committee’s senior Democrat.
Dingell released a copy of the letter Tuesday.
“The influence of organized crime in our markets is an issue that must be aggressively addressed,” Schapiro wrote Dingell on Feb. 28. “What we can bring to the ‘criminal enforcement table’ is the necessary market and technical expertise for government law-enforcement agencies to conduct significant and effective criminal investigations.”
Last month, citing a December article in BusinessWeek magazine, Dingell asked Schapiro, Atty. Gen. Janet Reno and Securities and Exchange Commission Chairman Arthur Levitt for reports on what they had done and planned to do about organized crime’s alleged infiltration of the penny-stock market “while regulators and law enforcement looked the other way.”
Aides to Levitt have offered Dingell closed briefings on the matter, as did Schapiro in her letter.
SEC spokesman John Heine had no immediate comment Tuesday. Justice Department spokesman John Russell declined comment.
Schapiro, in a speech Monday to a securities industry group, said that NASD Regulation and Nasdaq had formed a joint task force to study organized crime’s influence on the market.
While 15 firms were cited in the Dec. 16 BusinessWeek article, NASD spokesman Michael Robinson said that the NASD inquiry covers only those alleged to have organized crime ties. Nine brokerages were linked to mobsters in the article. Among them were Sovereign Equity Management Corp. of Boca Raton, Fla.; PCM Securities Ltd. of New York; Monitor Investment Group of New York and Euro-Atlantic of New York.
Schapiro also said in her letter that NASDR is investigating and reviewing trading activity in the stocks of 19 companies listed on Nasdaq or the OTC Bulletin Board run by Nasdaq. All these companies were mentioned in the BusinessWeek article. Their stock was either underwritten or sold by many of the firms under investigation, the magazine said.
Among the companies cited are Santa Monica-based Osicom Technologies Inc., Novatek International Inc. and Albuquerque-based Solv-Ex Corp.
Osicom Chief Executive Par Chadha said Tuesday: “Our inclusion was a total reckless, careless (act) on the part of BusinessWeek.” He said none of the firms cited in the article traded in his company’s stock “to any significant extent.”
