The Securities and Exchange Commission and the Department of Justice have separately filed charges against a number of people for their alleged involvement in a $12 million stock-loan fraud scam.
The criminal case involves charges filed for securities fraud conspiracy and other charges against stock-loan traders at Janney Montgomery Scott LLC and Morgan Stanley, including Anthony Lupo, Peter Sherlock, Donato Tramontozzi, Craig DeMizio, and Andrew Caccioppoli.
The DOJ says charges stem from its going investigation kickbacks and bribery that are allegedly happening within the securities industry. It says that securities firms frequently borrow and lend securities to each other, as well as coordinate short-sale transactions. Stock-loan finders look for inventories of a given security and match lenders and borrowers for transactions.
the DOJ says that several stock-loan traders illegally funneled millions of dollars in fraudulent finder fees to co-conspirators, even when finders’ services had not occurred. In return, the traders received cash bribes or payments made to their family members.
The defendants are facing up to 25 years in prison for conspiracy. A conviction of money laundering carries up to 20 years in prison. “Structuring” and false statement convictions can lead to up to five years in a federal penitentiary.
The SEC filed two lawsuits against 38 defendants. 17 current and ex-stock-loan traders from a number of brokerage firms, such Morgan Stanley, Janney Montgomery, Van der Moolen, Oppenheimer, A.G. Edwards, and Nomura Securities, are among the defendants.
The SEC says that the defendants regularly defrauded the brokerage firms that they worked for, as well as other people, by taking part in collusive loan transactions. As a result, the firms had to pay sham finder fees to firms that the traders, their friends, or family members controlled. These firms acted as fronts. They received large finder fees on thousands of stock loan transactions even though they did not provide a finder fee service. In many instances, the firms were not involved in the stock loan industry at all.
A few of the SEC defendants have already settled the charges by agreeing to be barred from the securities industry and from future violations. By settling, the defendants are not admitting to or denying wrongdoing. Three of the civil defendants say they will disgorge $94,262 in total and prejudgment interest.
If you have lost money because of the fraudulent actions of a securities industry member, you should contact Shepherd Smith and Edwards right away. We are stockbroker fraud attorneys that are known for our ability to help our investor clients recover their losses.
Contact Shepherd Smith and Edwards today and ask for your free consultation.
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