Lek Securities Corporation a securities broker dealer headquartered in New York New York and Samuel Frederik Lek (its former Chief Executive Officer) have been sanctioned by Financial Industry Regulatory Authority (FINRA) according to a FINRA Office of Hearing Officers Order Accepting Offer of Settlement based in part on findings that Lek Securities Corporation and Samuel Lek aided and abetted manipulative trading and failed to supervise its securities business. Department of Enforcement v. Lek Securities Corporation and Samuel Frederik Lek Disciplinary Proceeding No. 2011029713004 (Dec. 17, 2019).
According to the Order, Lek Securities Corporation and Samuel Lek knew or recklessly disregarded violative conduct which took place in the account of Avalon FA Ltd., which contained multiple accounts traded by Ukrainian and Russian individuals. Apparently, individuals engaged in manipulative trading in the Avalon account, generating illegal profits through layering (executing and cancelling orders to induce others into buying or selling stocks at inflated or artificial prices). The Order stated that Lek Securities Corporation and Samuel Lek provided significant assistance to Avalon, enabling Avalon to engage in a prohibited manipulative trading scheme, thereby aiding and abetting violations of Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5 and violating FINRA Rule 2010.
The Order also stated that Lek Securities Corporation and Samuel Lek neglected to create and maintain reasonable supervision systems to supervise trading even though the securities broker dealer knew of certain individuals, including a foreign trader, Pustelnik, and two Lek Securities Corporation stockbrokers, SVP and AL, who engaged in misconduct. FINRA stated that Lek Securities Corporation and Samuel Lek’s conduct was violative of FINRA Rules 2010, 3110(a) and NASD Rule 3010(a). The Order also stated that Lek Securities Corporation neglected to cooperate with FINRA’s investigation; conduct violative of FINRA Rules 2010 and 8210. FINRA censured and fined Lek Securities Corporation $900,000.00 while barring Samuel Lek from associating with any FINRA member in any capacity.
Final judgements were entered by consent against Lek Securities Corporation and Samuel Lek in which the securities broker dealer was fined $1,000,000.00; Samuel Lek was fined $420,000.00; and they were permanently enjoined from engaging in conduct violative of Securities Exchange Act of 1934 Sections 9(a)(2) and 10(b), SEC Rule 10b-5 and Securities Act of 1933 Section 17(a). Securities and Exchange Commission v. Lek Securities Corporation et al. Civil Action No. 17-cv-1789 (Oct. 1, 2019). After the securities broker dealer and Lek admitted to Avalon’s manipulative trading scheme, SEC censured the securities broker dealer and barred Lek from being a securities broker or investment advisor representative. In the Matter of Lek Securities Corporation and Samuel Lek Administrative Proceeding File No. 3-19581 (Oct. 10, 2019).
FINRA Public Disclosure reveals that Lek is the subject of a customer initiated investment related arbitration claim where the customer requested $500,000.00 in damages based upon allegations of breach of contract, misrepresentation, and excessive fees pertaining to penny stock transactions effected in the customer’s account. FINRA Arbitration No. 19-00800 (Mar. 27, 2019).
Lek was terminated by Lek Securities Corporation founded on accusations of him aiding and abetting a fraudulent trading scheme in violation of Securities Exchange Act of 1934 Section 10(b) and Rule 10b-5.
