Shearson, Broker Fined in NASD Trading Probe
WASHINGTON — Shearson Lehman Hutton Inc. was disciplined Tuesday by the National Assn. of Securities Dealers, which oversees the over-the-counter market, for allegedly manipulating some stock prices.
The group, which is the self-regulating body for the OTC, announced that it was fining Shearson Lehman $25,000 and suspending it as a market maker in seven stocks for 10 days.
A Shearson stockbroker, Timothy Norton, was fined $10,000 and barred from associating with any NASD member in any capacity for 30 days as part of the action.
The NASD said Norton entered eight fictitious trade reports in several securities in early 1987. It did not identify the companies involved but said another trader was being investigated on charges that he also entered fictitious trades during the same period.
Such improper actions are normally done near the close of trading to affect the closing price of a stock.
The NASD said Shearson failed to enforce procedures designed to detect the reporting of fictitious trades.
“In connection with this activity, Shearson failed to establish, maintain and enforce procedures designed to deter and detect the reporting of fictitious trades to the NASDAQ system,†the NASD said in a statement.
Other Cases Announced
Shearson and Norton agreed to the action but did not admit any wrongdoing in the case.
The action was part of disciplinary steps against 13 member firms and 32 people for violations of NASDAQ rules.
In other cases announced Tuesday, the NASD said Kenneth John Arscott, a Toms River, N.J., broker, was fined $100,000 and barred from association with any NASD member in any capacity. It charged him with receiving three checks from customers totaling $88,372 in payment for securities but using the money for himself. It said he failed to respond to NASD requests for information.
Sajjad Ahmed, a Brooklyn broker, was fined $10,000 and barred from association with any NASD member on charges that he made unauthorized transactions for two customers.
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