A Small Voice In Cyberspace

[Georgia Bard]

Opps someone just got nailed for naked shorting.

NASD Regulation Bars John Fiero, Expels Fiero Brothers, Inc., and Imposes $1 Million Fine for Illegal Short Sales, Market Manipulation and Extortion


WASHINGTON, Jan. 8 /PRNewswire/ -- NASD Regulation, Inc., today announced
that an NASD Regulation Hearing Panel barred John Fiero, expelled his firm,
Fiero Brothers, Inc. and ordered a fine of $1 million for engaging in a
fraudulent short selling, extortion and manipulation scheme.
On Feb. 6, 1998, NASD Regulation filed a complaint against Fiero and other
co-conspirators alleging that they colluded to drive down the price of 10
Nasdaq securities underwritten by now-defunct Hanover Sterling & Co. during
January 1995, and February 1995, through illegal short selling of those
securities. This "bear raid" scheme involved Fiero and others obtaining
nearly 1 million shares, units and warrants from Hanover Sterling at below
market prices through the use of threats and coercion to cover their
illegally-created short positions. Ultimately, the short selling scheme led
to the failure of Hanover Sterling on Feb. 24, 1995, which was quickly
followed by the collapse of its clearing firm, Adler, Coleman Clearing Corp.,
and the appointment of a Security Investors Protection Corporation trustee for
Adler Coleman.
In the decision, the Hearing Panel found that Fiero participated in an
extortion scheme by purchasing $12.1 million of securities from Hanover, at
prices $866,500 below the then-prevailing market price. Fiero used these
securities to cover his firm's short positions, and resold the rest, primarily
to other short sellers involved in the scheme. Hanover agreed to sell the
discounted securities to Fiero in attempt to end the shorting of the stocks.
The Hearing Panel also found that Fiero violated short selling rules from
Jan. 20 through Feb 23, 1995 by failing to make the required affirmative
determinations prior to engaging in short sales of the Hanover Sterling
stocks. NASD rules restrict "naked" short sales, that is selling a stock
short without ensuring that the stock can be borrowed or otherwise provided
for by settlement date, also known as an affirmative determination. The
Hearing Panel concluded that Fiero was not entitled to the market maker
exemption from the affirmative determination rule during the time his firm was
registered as a market maker because it was not engaged in bona fide market-
making transactions. Fiero manipulated the market for the Hanover securities
through his purchases and resale of the extorted stock and his illegal, naked
short selling.
Unless the matter is appealed to NASD Regulation's National Adjudicatory
Council (NAC), or called for review by the NAC, the Hearing Panel's decision
becomes final after 45 days. The sanctions imposed by the Hearing Panel are
not effective during this period. If the decision is appealed or called for
review, the sanctions may be increased, decreased, modified, or reversed.
The litigation of this case was conducted by the Enforcement Department
with assistance from NASD Regulation's Market Regulation Department. This
matter was investigated by the Market Regulation Department with assistance
from the Enforcement Department and NASD Regulation's New York, Denver,
Atlanta and Chicago Offices.
Investors can obtain more information and the disciplinary record of any
NASD-registered broker or brokerage firm by calling [phone], or by
sending an e-mail through NASD Regulation's Web Site, http://www.nasdr.com .
NASD Regulation oversees all U.S. stockbrokers and brokerage firms. NASD
Regulation, The American Stock Exchange(R), NASD Dispute Resolution, Inc. and
The Nasdaq Stock Market, Inc., are all subsidiaries of the National
Association of Securities Dealers, Inc., the largest securities-industry self-
regulatory organization in the United States.



SOURCE NASD Regulation, Inc.
Web Site: http://www.nasd.com http://www.nasdr.com