Hallmark Investments, Inc., a broker-dealer headquartered New York City, as well as the firm’s chief executive officer, Steven Dash, and stockbroker, Stephen Zipkin, have been sanctioned by Financial Industry Regulatory Authority (FINRA) pursuant to an Office of Hearing Officers Order Accepting Offer of Settlement containing findings that the firm and staff defrauded customers. Department of Enforcement v. Hallmark Investments, Inc. et al., No 2014039352302 (Aug. 14, 2017). Particularly, Hallmark has been expelled by FINRA; Dash has been barred from associating with any FINRA member in any capacity, and Zipkin has been suspended for two years.
According to the Order, in November of 2014, a total of 39,000 Avalanche International Corp. unregistered shares were sold to customers by Zipkin, Dash and the firm. Apparently, the firm obtained the shares through a consultative arrangement, and fraudulently inflated the share prices in connection with fourteen customers’ transactions. The Order stated that Zipkin and Dash acted on the company’s behalf in making omissions and misrepresentations to prompt the transactions. Consequently, FINRA found that Dash’s and Hallmark’s conduct constituted violations of Securities Act of 1934 Section 10(b), Securities Exchange Commission (SEC) Rule 10b-5, as well as FINRA Rules 2010 and 2010; Zipkin’s conduct was found by FINRA to be violative of FINRA Rule 2010 for contravening Securities Act of 1933 Section 179(a).
Apparently, the firm deceptively issued confirmations to the affected customers that purchased the shares of ALVP. Customers were evidently deprived of information about the difference between Hallmark’s acquisition costs of ALVP and the price that customers paid, and were also in the dark about the firm serving as a principal for accounts that the securities were sold from. Hallmark’s conduct was found by FINRA to be violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-10, FINRA Rules 2010 and 2232. Dash and Hallmark were also found by FINRA to have committed violations of FINRA Rules 2010 and 2121 for excessively charging customers in the transactions.
Moreover, the Order identified a total of 195,000 Microphase Corporation shares that were sold to customers by the firm despite the shares having been unregistered with the SEC or having a registration exemption; 67,500 of the shares were sold to customers by Zipkin. FINRA found that the firm’s and Zipkin’s conduct in that regard was violative of FINRA Rule 2010 for breaching Securities Act of 1933 Section 5. The firm was also sanctioned for failing to supervise transactions to ensure compliance with Securities Act of 1933 Section 5; conduct violative of FINRA Rules 2010 and 3110, as well as NASD Rule 3010.
The Order additionally stated that Dash and Hallmark both failed to timely cooperate with FINRA during an investigation into their misconduct. The firm and Dash reportedly failed to furnish information to FINRA staff as required under Rule 8210; wherein FINRA found their conduct to be violative of FINRA Rules 2010 and 8210 as a result.
FINRA Public Disclosure reveals on September 12, 2011, a customer initiated investment related written complaint involving Dash’s and Zipkin’s conduct was settled for $65,000.00 in damages based upon allegations that Dash and Zipkin effected excessive and unsuitable equity transactions in a customer’s investment account. Further, on January 28, 2013, a customer initiated investment related written complaint regarding Dash’s activities was resolved for $4,500.00 in damages based upon allegations that Dash charged the customer with excessive commissions on stock investments.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
