Dealers’ Group Fines Maidstone
WASHINGTON (AP) _ Regulators fined Maidstone Financial Inc., a securities firm accused of defrauding investors, and four affiliated brokers a total $14.8 million. The firm and the brokers were censured and barred from the industry.
The move was announced Wednesday by NASD Regulation, the self-policing arm of the National Association of Securities Dealers, which operates the Nasdaq Stock Market. By expelling Maidstone, NASD Regulation took the most severe action available to it.
In agreeing to the settlements, the firm and the four brokers neither admitted nor denied the allegations.
Maidstone, which was based in New York City, and HGI Inc., allegedly made more than $16.2 million in illicit profits and defrauded investors as underwriters of three securities _ Sims Communications Inc., Natural Health Trends Corp. and International Cutlery Ltd.
The two firms, working through the four brokers _ Maidstone Chairman and Chief Executive Officer Marshall Bernstein, Maidstone President Stuart Litman, HGI Chairman and Secretary Mark Arthur Hanna, and HGI Vice President Brian Douglas Scanlon _ allegedly bought stock at below-market prices to cover large negative stock positions they had intentionally created.
The NASD still has a case pending against HGI, formerly known as the Harriman Group, which was based in Jericho, N.Y.
The NASD fined Maidstone $1 million and censured the firm. Bernstein and Litman each were fined $1.9 million, and Hanna and Scanlon were fined $5 million apiece.