The Securities and Exchange Commission is charging Ryan King and Thomas Gonnella with securities fraud over a bogus “parking” scam. According to its Enforcement Division, the two Wall Street traders tried to get a round a firm policy that places a penalty for holding securities too long, and one of them purportedly placed securities in the trading books of the other so such fees wouldn’t be imposed and end up affecting his annual bonus.
The two men worked at different firms. According to the SEC, Gonnella asked King to help him get around his firm’s policy by arranging for the latter to buy securities that he would then later buy from King’s firm at a profit. By parking the securities in King’s trading book to reset the holding period, Gonnella was seeking to avoid charges to his trading profits and bonus as a result of inventory.
Per the administrative orders, Gonnella parked about 10 securities with King. The alleged round-up trades purportedly caused Gonnella’s firm to lose about $174,000.
The Commission’s Enforcement Division claims that after Gonnella’s supervisor started asking about the trades, King and Gonnella tried to avoid detection by adding an interdealer broker to subsequent trades and using cell phones so their discussions couldn’t be recorded by their employers. The two men were eventually fired.
While the case against Gonnella is going to an administrative law judge, King is cooperating with the regulator. He is settling by disgorging profits and agreeing to a securities industry bar. Financial penalties will be determined later.
If you suspect you were the victim of securities fraud, contact Shepherd Smith Edwards and Kantas, LTD LLP today.
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