GEX Management Inc (GXXM)

[StockRoomBully]

Lek securities complaint

"Disciplinary Proceeding
Nos. 20110297130-09
20120336673-0"

They got caught in a Master Sub Trading account

STATEMENT OF FACTS
8. In a master-sub account trading model, a top-level customer typically opens an
account with a registered broker-dealer (the “master account”) that permits the customer to have
subordinate accounts for different trading activities (the “sub-accounts”). The master account is
usually divided into sub-accounts for the use of individual traders or groups. In some instances,
the sub-accounts are further divided to such an extent that the master account customer and the
registered broker-dealer with which the master account is opened may not know the actual
identity of the underlying traders.2
9. Although master-sub account arrangements may be used for legitimate business
purposes, some customers who seek to use master-sub account relationships structure their
account with a broker-dealer in this fashion in an attempt to avoid or minimize regulatory
obligations and oversight.3
10. A sub-account trader may, for example, open multiple accounts under a single
master account and proceed to effect trades on both sides of the market to manipulate a stock
price by entering orders to drive the price up, mark the close, or engage in other manipulative
activity. Such conduct may create the false appearance of activity or volume and, as a result, may
fraudulently influence the price of a security.4
2
SEC Office of Compliance Inspections and Examinations (“OCIE”) National Exam Risk Alert, Vol. 1, No.