The Financial Industry Regulatory Authority said Monday that it has expelled New York-based Hallmark Investments, Inc. and barred its CEO, Steven Dash, in connection with a scheme to sell shares of stock to customers at fraudulently inflated prices.
Stephen Zipkin, a Hallmark representative, was also suspended for two years and required to pay more than $18,000 in restitution to affected customers.
FINRA found that Hallmark, Dash and Zipkin used an outside brokerage firm, manipulative trading and misleading trade confirmations to sell nearly 40,000 shares of stock that the firm owned to 14 customers at fraudulently inflated prices.
At Dash's direction, Hallmark used a prearranged trading scheme to sell the shares to the customers at $3 per share, according to FINRA.
"At the time, the public offering price for Avalanche shares was just $2.05 per share, and Hallmark sold Avalanche shares to other customers at prices as low as 80 cents," FINRA said.
The complaint states that Hallmark, Dash and Zipkin never disclosed to the customers that the shares they were purchasing belonged to Hallmark, the firm was charging extraordinary markups on the transactions, the firm was selling Avalanche shares to other customers during the same period at much lower prices, or that the shares could be purchased for substantially less on the open market.
