NASD Alleges 4 Firms Colluded Against Rival
Executives at four brokerages colluded to drive down prices for stocks sold by another firm, eventually running the rival out of business in a scheme that involved tips passed to financial journalist Dan Dorfman, industry regulators alleged Wednesday.
The National Assn. of Securities Dealers charged that the owners of New York-based Fiero Bros. Inc. and three now-defunct brokerages--including one that has been investigated for possible links to organized crime--made $6.4 million in illegal profits by joining to drive down prices on 10 stocks sold by the Hanover Sterling & Co. brokerage. The NASD made the complaint public Wednesday.
The complaint alleges that owners of the firms targeted stocks sold by Hanover for “short” selling.
Some of the brokerage owners contacted Dorfman, when he worked at the CNBC cable network, offering critical information about stocks sold by Hanover and about Hanover itself, the NASD alleged.
Dorfman, who was not charged with any wrongdoing, aired a “negative report” on Jan. 20, 1995, about Hanover and some stocks it was selling, the NASD said.
Hours before Dorfman’s broadcast, the NASD charged, Fiero Bros., Aspen Capital Group of Denver and Falcon Trading Group of Boca Raton, Fla. sold short a total of more than 60,000 shares of the Hanover stocks. The firms then told Hanover--which was losing money from the short-selling--that they would stop the short sales if Hanover provided them with stock at below-market prices, the NASD charged. Hanover agreed, the NASD alleged. Hanover, a penny stock firm, went out of business in February 1995.
A lawyer for Fiero and its owner, John Fiero, denied the NASD allegations.
The NASD, an industry group that polices U.S. brokers and brokerages, is seeking restitution and other unspecified sanctions.
Aspen and Falcon are defunct, as is the other firm that was charged, Sovereign Equity Management of Boca Raton.
The lawyer for Sovereign and Falcon did not respond to a request for comment. Carlson, who is not represented by a lawyer, could not be reached. A lawyer representing Dorfman also could not be reached.
