Texas Day-Trading Firms Agree to NASD Fines
Five Texas firms offering day-trading services settled allegations that they violated various industry rules, the regulatory arm of the National Assn. of Securities Dealers said Thursday.
Without admitting or denying the allegations, the firms, located in Houston and Austin, were censured and ordered to pay fines of up to $75,000, said NASD Regulation Inc.
NASD Regulation said one of the firms, Landmark Securities Corp., was expelled from NASD. Its former president, James Gillock, was fined $50,000 and suspended for two years.
The Houston-based firm was accused of issuing misleading statements on customers’ access to markets, misrepresenting the risks of day trading, allowing a person who was not properly registered to supervise day-trading activities, extending improper loans and violating short-sale and trade reporting rules, NASD Regulation said.
The other Houston firms accused of similar violations were Momentum Securities, which was fined $75,000, and Summit Trading Inc., which was fined $20,000. Summit’s president, William Sunshine, was also fined $20,000.
The NASD complaint also named Austin-based Cornerstone Securities Corp. and its former president, Russell Grigsby. They were fined a total of $35,000.
CyBerBroker Inc., located in Austin, was accused of allowing trade executions to be carried out by people not properly registered as equity traders. The firm and its former president, Mark Stryker, were ordered to pay $16,000 and give up $4,000 in commissions.
Attorneys for the Texas firms could not be immediately reached for comment.
This is not the first time industry regulators have cracked down on day-trading firms. In February 2000, NASD Regulation announced enforcement actions against five Texas firms and a former officer. Actions also were taken against a Chicago firm and individuals in New Orleans.
Currently, complaints are pending against All-Tech Direct Inc. of Montvale, N.J., one of the largest day-trading companies, as well as Stock USA Inc. of San Diego.
