Promoters Fined By The S.E.C.

[marty_lewis]

Daytrader firms fined:

http://biz.yahoo.com/rf/010607/n07484610.html

Thursday June 7, 7:04 pm Eastern Time

Five Texas day-trading firms settle NASD complaints
(UPDATE: Adds comment from ProTrader, CyBerBroker, details throughout)

By John Poirier

WASHINGTON, June 7 (Reuters) - Five Texas firms offering day-trading services settled allegations of violating various industry rules, the regulatory arm of the National Association Securities Dealers Inc. (NASD) said on Thursday.
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Without admitting or denying the allegations, the firms, located in Houston and Austin, were censured and ordered to pay fines of up to $75,000, said NASD Regulation Inc.

NASD Regulation said one of the firms, Landmark Securities Corp., was expelled from NASD. Its former president, James Gillock, was fined $50,000 and suspended for two years.

The Houston-based firm was accused of issuing misleading statements on customers' access to markets, misrepresenting the risks of day trading, allowing a person who was not properly registered to supervise day-trading activities, extending improper loans and violating short-sale and trade reporting rules, NASD Regulation said.

THE OTHER FOUR FIRMS

Allegations facing the other four firms include misleading advertisements, short sale and trade reporting violations, and operating without proper supervisory procedures.

Houston firm Momentum Securities LLC was fined $75,000. It, in addition, allegedly failed to disclose possible delays to system access and trade execution and allegedly paid compensation to unregistered entities.

Summit Trading Inc., also of Houston, and its President William Sunshine were fined a total of $20,000.

The NASD complaint also named Austin-based Cornerstone Securities Corp., which is now known as ProTrader Securities Corp., and its former president, Russell Grigsby. They were fined a total of $35,000 for the alleged violations, which also included questionable loans to customers.

CyBerBroker Inc., located in Austin, was only accused of allowing trade executions to be carried out by people not properly registered as equity traders. The firm and its former president, Mark Stryker, were ordered to pay $16,000 and give up $4,000 in commissions.

``The matter took place more than 2 years ago,'' CyBerBroker spokesman Trey Robinson said. ``We cooperated with NASDR during the inquiry and we continue to try to be compliant with all the rules at all times.''

ProTrader said it cooperated fully with NASD and has gone through a management shake up. ``As part of the cooperative process, we have worked diligently with the NASD to correct internal polices and procedures, to ensure violations of this type will not occur at ProTrader in the future,'' Michael Koch, chief compliance officer at ProTrader, said.

Attorneys for the other firms and individuals could not immediately be reached for comment.

This is not the first time industry regulators have cracked down on day-trading firms. In February 2000, NASD Regulation announced enforcement actions against five Texas firms and a former officer. Actions also were taken against a Chicago firm and individuals in New Orleans.

Currently, complaints are pending against Montvale, New Jersey-based All-Tech Direct Inc., one of the largest day trading companies, and three of its top officers, as well as Stock USA Inc. in San Diego, California.



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