Shearson Lehman Indicted for Securities Violations
CLEVELAND (AP) _ Shearson Lehman Brothers Inc. and two former employees in Cleveland have been indicted on charges of defrauding investors by making unauthorized trades, state officials said Friday.
The Cuyahoga County grand jury Thursday issued 42 indictments each against Shearson; Sheldon Strauss, a former account executive; and Stephen Weinberg, former branch manager of the firm’s Cleveland office, Ohio Division of Securities Commissioner Mark Holderman said.
The indictments charge Strauss with violating the Ohio Securities Act through fraud and false representation in the sale of securities. The corporation and Weinberg also are named in the indictments for their alleged complicity, Holderman said.
Strauss allegedly placed investors’ funds in highly speculative stocks without their knowledge, Holderman said.
″Strauss was gambling quite a bit with other people’s money,″ Holderman said. The state has investigated about 150 complaints filed by investors against Strauss during the last two years, he said.
Many of the alleged violations were discovered during the stock market crash in October 1987, Holderman said. He said Shearson already has settled more than $4.9 million in claims by Strauss’ former clients.
Weinberg and Shearson were charged because they ″knew there were problems″ with Strauss’ accounts but didn’t try to put a stop to the practices, Holderman said.
The company will not comment until it has fully reviewed the indictments, said Steve Fagan, a spokesman for Shearson in New York.