Scott Neal Glazer of Calabasas, CA, a stockbroker with GBS Financial Corp., was suspended from association with any Financial Industry Regulatory Authority (FINRA) member in all capacities for six months and fined $50,000 in connection with an Order Accepting Offer of Settlement containing findings that Glazer engaged in manipulative trading and caused the publication of reports of non bona fide purchases and sales. Department of Market Regulation v. Glazer, No. 20090174025-02 (Oct. 20, 2015).
According to the Order, from January 2009 through December 2011, Glazer had employed deceptive devices and contrivances in connection with purchases and sales of shares of National Technical Systems, Inc. stock, a Nasdaq National Market security. The Order stated that Glazer marked the open and closing prices of the NTSC stock and engaged in matched trading in the stock, all in an attempt to manipulate the price of NTSC.
Glazer and DG, a former Stockbroker at another FINRA firm, reportedly held significant quantities of NTSC shares in their personal brokerage account. In January 2009, Glazer, while working with others including DG, manipulated the price of NTSC. The Order stated that in order for the price of NTSC to increase and prevent a decline, Glazer had effected transactions in the stock that were at or near the open and at or near the close. Glazer also reportedly furthered the manipulation of the NTSC stock by engaging in matched trading for purposes of avoiding margin calls and stabilizing and increasing the price of the NTSC stock.
The Order stated that Glazer effected transactions in his accounts, his spouse’s account, and six of his customers at GBS Financial Corp., where he marked the close on sixty three separate occasions and marked the open on eleven occasions in furtherance of the manipulation.
In one case, according to the Order, DG received a $3,031 margin call in his personal brokerage account that was due on January 22, 2009. NTSC had closed on January 20, 2009, at a price of $3.62. On January 21, 2009, at 15:01, DG entered an all-or-none limit order to sell one hundred and five shares of NTSC in his personal brokerage account at $3.70/share. Subsequently, at 15:55, Glazer reportedly entered an all-or-nothing limit order to purchase one hundred and five shares in his spouse’s account at GBS. In effect, the orders executed against each other, which set the closing price of NTSC $0.08 higher than it closed on January 20, 2009. The Order indicated that no trading actually took place on January 22, 2009, but the $0.08 increase increased DG’s portfolio, allowing him to meet his margin requirement by the January 22, 2009 due date. Other transactions, according to the Order, took place in a similar fashion involving Glazer and other individuals.
Additionally, the Order stated that Glazer effected forty five pairs of matched orders or pre-arranged trades in NTSC. In twenty-four of the forty-five instances, Glazer purportedly matched trades between the brokerage accounts of his GBS customers. In the remainder of instances, Glazer and DG had effected matched trades between their customer accounts, Glazer, and his spouse. The findings indicated that the matched orders were executed, for the most part, at prices that were equal or higher than prior trade prices. In one case, on February 17, 2009, at 15:58, DG had entered an all-or-nothing limit order in one of his personal brokerage accounts to sell one hundred and five shares of NTSC at $3.45/share. The Order stated that a minute later, Glazer entered an all-or-nothing limit order to purchase one hundred and five shares of NTSC at $3.45/share in the account of his customer. Such orders executed against each other at 15:59, which set the closing price of the NTSC stock $.021 higher then the previous trade which was not executed by Glazer, DG, or customers. Other transactions, according to the Order, took place in a similar fashion involving Glazer and other individuals.
FINRA found that Glazer’s aforementioned misconduct amounted to knowingly or recklessly effecting transactions in, and inducing the purchase or sale of a security via means of manipulative, deceptive, or other fraudulent devices in violation of FINRA Rules 2020 and 2010. Further, as indicated by the Order, Glazer’s marking the open and close of NTSC and matching trading in NTSC resulted in the publication and circulation of communications and reports of non bona fide purchases and sales of NTSC. FINRA found that this conduct was violative of FINRA Rule 5210, and NASD Rule 330 and IM-3310.
Firms and individuals, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
Section 10(b) of the Exchange Act makes it unlawful “to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”
Four elements are necessary to show in finding a violation of Section 10(b) of the Exchange Act, Rule 10b-5: 1) misrepresentations and/or omissions were made; 2) misrepresentations and/or omissions were material; 3) representations and/or omissions were made with requisite intent (e.g. scienter), and 4) misrepresentations and/or omissions were made in connection with the purchase or sale of securities.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
