April 2001 Newsletter
Issue Four, Volume Two

ONLY ON WALL STREET

By Mike Gasior

As someone who has spent his entire career on and around Wall Street it has never ceased to amaze me that Hollywood hasn't used it as a more constant source of material. Perhaps the saying that "truth is stranger than fiction" holds too much water; that people just wouldn't believe the goings on if you did make a movie about it. I thought I might dedicate this month's newsletter to some of the bizarre news items I've come across involving the people who handle your investments. Please don't read this the wrong way. Having been a stockbroker, I sincerely mean it when I tell you that I truly adore the people who populate Wall Street. Brokers tend to be resourceful and resilient people who often thrive in other endeavors once they leave the business. Some are even quite nice folks. I'd like to think I meet both criteria. Another former stockbroker who has enjoyed massive success after leaving the "business" is the one and only Martha Stewart. She now enjoys billionaire status. As far as being "nice folk", I once shared the first class cabin on an airplane with Ms. Stewart and after witnessing the treatment some of her assistants received it became clear to me why guns aren't allowed onboard. I digress.

Now Hollywood hasn't completely ignored Wall Street although a few times they should have. The movie "Wall Street" with Michael Douglas and Charlie Sheen is still my all time favorite and I think that feeling is shared around the financial markets. The movie "Boiler Room" was watchable, but just too over the top. It took everything about being a broker and at least doubled or tripled it. The television show "The $treet" couldn't have sucked more and that's all I'll say. I confess right here that I find it hard not to sit through "Trading Places" whenever I run across it on cable. Many people don't remember a movie called "Quick Silver" with Kevin Bacon but it had some good moments in it, as did "Roll Over" many years ago. But all of this is fiction, and I really wanted to share some non- fiction with you this month, so here goes.

WALL SREET AND THE PORN STAR

It was pretty big news just a little over a year ago, but I can't help but mention it again. You sort of need to let the story build on you a little because as the facts add up it becomes more and more unbelievable.

A guy, who was a married president of a medium size brokerage firm, decides that he could use a girlfriend on the side. Well good for him you think. Better still; he gets himself a girlfriend on the side that just so happens to be a porn actress. Even better for him, I guess. Now of course, in his position with his firm, he is privy to information regarding deals his firm is handling for clients whom are paying his firm millions of dollars for their expertise and confidence. He begins to pass this sensitive inside information about these deals to the new girlfriend who then decides to do a little insider trading of her own and profits pretty nicely from it. Things really begin to unravel though when her OTHER boyfriend decides to start trading on the same information. Oops.

Now come on! That's got to be a TV show or movie right there. Or at the very least, a damn good Jerry Springer episode.

"CUT HER INTO PIECES"

Well it's no surprise to anyone that brokers can be pretty cutthroat. It's still a surprise though when a broker not only wants to cut his wife's throat, but better still, cut her into fish bait.

According to police and media reports, Pennsylvania stock broker Joel Sandler was a little upset about the prospect of having to share the marital assets with his estranged wife after she filed for divorce in January and moved out. Since he was acquainted with a gentleman in town who had a reputation as a heavy gambler, Mr. Sandler figured that the gentleman must also be good friends with Tony Soprano and asked if he could have someone "taken care of".

Well the gambler immediately contacted the cops who met with Mr. Sandler pretending to be hit men to pursue arranging a "contract" on his wife. Mr. Sandler didn't want to talk in the restaurant for fear of being heard, so he took the cops outside and relayed his message by holding up little preprinted cue cards with what he wanted done printed on them. What he wanted was his wife to "disappear" and wondered if they could burn, bury or chop her up. Good grief is all I can say. And his offer was $10,000 down and $20,000 more after they ran her through the wood chipper, which makes him sound like a cheapskate besides. Tony Soprano would have been insulted.

Mr. Sandler was arrested April 23rd and now police are investigating whether he burnt his house down last year to collect on a few hundred thousand in insurance claims.

THE BLOTTER

I don't know how you are, but I am always one of those people who reads the local paper to see who got arrested or caught speeding via the police blotter. I'm going to share some information which I reprint for you right off the NASD's own enforcement website. Please remember that all these stories are true, current and the names have NOT been changed to protect anyone. Here goes:

YOUR MONEY IS MY MONEY

Rodney Lynn Belzer (CRD #1616847, Registered Representative, Kansas City, Missouri) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity. Without admitting or denying the allegations, Belzer consented to the described sanction and to the entry of findings that he accepted $775,600 from public customers intended for investment purposes and, without the knowledge or consent of the customers, deposited the funds into his personal bank account and used $530,600 of the funds for his own use and benefit. (NASD Case #C04010003)

Mark Christopher Chang (CRD #2648704, Registered Representative, Miami, Florida) was barred from association with any NASD member in any capacity. The sanction was based on findings that Chang altered nine checks issued to public customers, endorsed the checks, and cashed eight of the checks, all without the authorization of the firm or the customers. Chang also failed to respond to an NASD request for information. (NASD Case #C07000046)

Peter Gerard Olton (CRD #1967551, Registered Principal, Parlin, New Jersey) was barred from association with any NASD member in any capacity. The sanction was based on findings that Olton converted $13,000 of a public customer's funds by effecting a wire transfer from the customer's brokerage account to his personal bank account without the knowledge, authorization, or consent of the customer. The findings also stated that Olton failed to respond to NASD requests for information. (NASD Case #C10000168)

Mark S. Pacelli (CRD #2344494, Registered Representative, Plantation, Florida) was barred from association with any NASD member in any capacity and ordered to pay $40,000, plus interest, in restitution to a public customer. The sanctions were based on findings that Pacelli received $40,000 from a public customer for investment purposes and used the funds for his own benefit. Pacelli also failed to respond to an NASD request for information. (NASD Case #C07000063)

Eugene McCall, Jr. (CRD #2276981, Registered Representative, Elida, Ohio) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity and ordered to pay $241,344.55, plus interest, in restitution to public customers. Proof of restitution must be submitted before reassociating with a member firm or before requesting relief from any statutory disqualification. Without admitting or denying the allegations, McCall consented to the described sanctions and to the entry of findings that he sold purported "investments" to public customers totaling $241,344.55 and received at least $201,046.81 from the account into which these funds were placed and used the funds for his own benefit, without the knowledge or consent of the customers. The findings also stated that McCall provided materially false, inaccurate, and misleading information in response to an NASD request for information and failed to respond to NASD requests for information and documents. (NASD Case #C8B000016)

Morgan Simonson (CRD #3136194, Associated Person, New York, New York) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity and ordered to pay $9,619.21 in restitution to a public customer. Satisfactory proof of restitution, with interest, must be made prior to reassociation with any NASD member or before requesting relief from any statutory disqualification. Without admitting or denying the allegations, Simonson consented to the described sanctions and to the entry of findings that he transferred $18,719.21 in customer funds to his personal bank account without the customer's prior knowledge, authorization, or consent and misused and commingled the funds. The findings also stated that Simonson returned $9,100 to the customer and converted the remaining balance for his own use and benefit. In addition, the NASD found that Simonson prepared monthly account statements for the customer that contained false information. Moreover, the NASD found that Simonson failed to inform his member firm that he maintained a securities account with another member firm and failed to inform the other member firm that he was associated with a member firm. Furthermore, the NASD findings stated that Simonson failed to respond to NASD requests for information and documentation. (NASD Case #C10010040)

Robert James Strain, II (CRD #2787826, Registered Representative, Charlotte, North Carolina) was barred from association with any NASD member in any capacity. The sanction was based on findings that Strain caused the wire transfer of funds totaling $500 from an investment club account to his aunt's bank account although he was not entitled to any of the funds in this account. Strain also failed to respond to NASD requests for information. (NASD Case #C07000076)

Susan Jennifer Loetell (CRD #1372725, Registered Principal, Cockeysville, Maryland) was barred from association with any NASD member in any capacity. The sanction was based on findings that Loetell withdrew approximately $41,000 from proprietary accounts of her member firm and converted the funds to her own use and benefit without the knowledge or consent of her firm. The findings also stated that Loetell failed to respond to NASD requests for information and to appear for an on-the-record interview. (NASD Case #C9A000034)

Gavin John Towers (CRD #2233516, Registered Representative, Cammery, Australia) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity. Without admitting or denying the allegations, Towers consented to the described sanction and to the entry of findings that he effected a wire transfer of $6,049.53 from the account of a public customer, deposited the funds into his personal bank account, and converted the funds to his own use and benefit without the customer's knowledge or consent. The findings also stated that Towers composed a Letter of Authorization that authorized the transfer of the public customer's funds from his account at a member firm into a bank account controlled by Towers. Towers forged the customer's signature to the letter without the customer's knowledge or consent. (NASD Case #C05010005)

Jang Soo Lim (CRD #2881926, Registered Representative, Forest Hills, New York) was named as a respondent in an NASD complaint alleging that he arranged for $15,000 in loans to be issued against the life insurance policy of a public customer without the customer's knowledge, authorization, or consent and converted and/or misused the loan proceeds. The complaint also alleges that Lim forged the signature of the customer on checks issued by an insurance company to the customer in connection with the conversion. In addition, the complaint alleges that Lim failed to respond to NASD requests for information. (NASD Case #C10010019)

Charles Wayne Berry (CRD #1300104, Registered Representative, Portsmouth, Virginia) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity. Without admitting or denying the allegations, Berry consented to the described sanction and to the entry of findings that he facilitated the withdrawal of funds from an insurance client's annuity and a variable appreciable life insurance contract, without the knowledge or consent of the customer. Furthermore, the NASD found that Berry endorsed the disbursement checks with the customer's name, without her specific authorization, and deposited the proceeds into his personal bank account, thereby commingling the customer's funds with his personal funds. (NASD Case #C07000067)

Ronald Silas (CRD #1047209, Registered Representative, San Bruno, California) was barred from association with any NASD member in any capacity. The sanction was based on findings that Silas received a $30,000 check from public customers for investment purposes and converted the funds to his own use and benefit. Silas also failed to respond to NASD requests for information. (NASD Case #C02000041)

Anthony Andrew Marx, Jr. (CRD #2180220, Registered Representative, Astoria, New York) was barred from association with any NASD member in any capacity and ordered to pay $91,080.36, plus interest, in restitution to his former member firm. The sanctions were based on findings that Marx effected unauthorized transactions in the account of public customers without their prior knowledge, authorization, or consent. The findings also stated that Marx drew checks on the funds in the account of public customers, endorsed the checks with the payees' signatures and his own signature without the knowledge or consent of the customers, deposited the funds into his personal bank account, and converted funds totaling $13,623.71 to his own use and benefit. Marx also failed to respond to NASD requests for information. (NASD Case #C10000100)

THE CUSTOMER IS NOT ALWAYS RIGHT

Max Gordon Gladstone (CRD #2220722, Registered Representative, New York, New York) submitted a Letter of Acceptance, Waiver, and Consent in which he was fined $5,000 and suspended from association with any NASD member in any capacity for 10 business days. The fine must be paid before reassociating with an NASD member firm. Without admitting or denying the allegations, Gladstone consented to the described sanctions and to the entry of findings that he purchased shares of stock in the account of a public customer without the knowledge or consent of the customer and in the absence of written or oral authorization to exercise discretion.

Tam Thanh Le (CRD #3132393, Registered Representative, Balch Springs, Texas) was named as a respondent in an NASD complaint alleging that he received a $2,000 check from a public customer to purchase a variable annuity, failed to execute the purchase of the annuity, and, instead, without the customer's knowledge or consent, misused the funds by applying the proceeds to pay premiums on insurance policies belonging to other customers. The complaint also alleges that Le failed to respond to NASD requests for information. (NASD Case #C05010002)

Averell Golub (CRD #2083375, Registered Representative, Brooklyn, New York) was fined $10,000, suspended from association with any NASD member in any capacity for one year, and ordered to pay $20,527.48, plus interest, in restitution to a public customer within 60 days from the date of the National Adjudicatory Council (NAC) decision. The NAC imposed the sanctions following appeal and call for review of an Office of Hearing Officers (OHO) decision. The sanctions were based on findings that Golub engaged in material misrepresentations to public customers regarding a security, failed to disclose any negative information about the issuer, and fraudulently induced the customers to purchase the security.

Joseph John Giordano (CRD #2684597, Registered Representative, Centereach, New York) was fined $15,000, suspended from association with any NASD member in any capacity for one year, barred from association with any NASD member in any capacity, and ordered to pay $35,179.79, plus interest, in restitution to public customers. The fine must be paid and proof of restitution must be provided before reassociating with a member firm. The sanctions were based on findings that Giordano executed unauthorized trades in the accounts of public customers without discretionary trading authority, and, in order to execute unauthorized trades in furtherance of a fraudulent scheme, failed to follow a customer's instructions to send him stock certificates for a security that he had previously purchased. The findings also stated that Giordano canceled a customer's stockholding without authorization and made a specific price prediction to a public customer about an unseasoned security without an adequate, accurate, or reasonable basis for the prediction. Giordano's bar became effective December 27, 2000. (NASD Case #CAF000021)

George Christodolou a/k/a George Christo (CRD #2614231, Registered Principal, Staten Island, New York) submitted an Offer of Settlement in which he was fined $10,000, suspended from association with any NASD member in any capacity for 18 months, and ordered to requalify by exam as a general securities representative within 90 days of the expiration of the suspension. If Christodolou fails to requalify within this period, he will be suspended from association with any NASD member in any capacity until he passes the exam. The fine must be paid prior to reassociating with a member firm or prior to requesting relief from any statutory disqualification. Without admitting or denying the allegations, Christodolou consented to the described sanctions and to the entry of findings that he executed transactions in the account of public customers without their prior knowledge, authorization, or consent.

Richard Alexander Preisig, Jr. (CRD #2372868, Registered Representative, Pelham Manor, New York) submitted an Offer of Settlement in which he was fined $25,000 and barred from association with any NASD member in any capacity with the right to reapply in five years. The fine must be paid before reassociating with a member firm or before requesting relief from any statutory disqualification. Without admitting or denying the allegations, Preisig consented to the described sanctions and to the entry of findings that he trained registered representatives to aggressively telemarket low-priced, speculative securities underwritten and/or recommended by his member firm to the public. The findings also stated that Preisig directed the representatives to engage in abusive sales practices including making baseless price predictions, making material misrepresentations, omitting material negative information during sales presentations, and discouraging representatives from processing net customer sell orders in the member firm's house stocks. (NASD Case #CAF990045)

Luis Alberto Gonzalez (CRD #2672385, Registered Representative, Rye, New York) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity. Without admitting or denying the allegations, Gonzalez consented to the described sanction and to the entry of findings that he effected unauthorized transactions in the account of a public customer. The findings also stated that, in order to effect an unauthorized sale, Gonzalez caused the impersonation of the customer's financial advisor and affixed photo- copies of the customer's signature to letters of authorization and wire instructions in order to effect an unauthorized sale and to wire funds from the customer's account to pay for the loss incurred because of the large difference in price between the original purchase and the sale. (NASD Case #C10010008)

OUR HIGHLY QUALIFIED SALESPEOPLE

Salvatore Louis Esposito (CRD #2534742, Registered Representative, Howard Beach, New York) was barred from association with any NASD member in any capacity. The sanction was based on findings that Esposito had an impostor take the Series 7 qualification exam on his behalf. The findings also stated that Esposito failed to respond truthfully during an NASD on-the-record interview. (NASD Case #C10000186)

Frederick Michael Benson (CRD #2876856, Registered Principal, Woodinville, Washington) submitted an Offer of Settlement in which he was fined $5,000 and suspended from association with any NASD member in any capacity for 30 days. Without admitting or denying the allegations, Benson consented to the described sanctions and to the entry of findings that he held himself out as a broker and affirmatively misrepresented his registration status. The findings also stated that Benson recommended securities transactions to public customers, made announcements about particular stocks to everyone in the trading room on a regular basis, and talked to individual customers about stocks during the trading day without being registered with the NASD. In addition, the NASD found that Benson accepted customer orders and entered them on the branch's admin machine prior to being registered with the NASD.

BOUNCING CHECKS TO YOUR EMPLOYER?

Brandon Douglas McLarty (CRD #2509059, Registered Principal, Indianapolis, Indiana) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity. Without admitting or denying the allegations, McLarty consented to the described sanction and to the entry of findings that he effected numerous index option transactions in his personal margin accounts maintained at his member firm without depositing the required margin. Moreover, the NASD found that McLarty attempted to meet margin requirements by providing the member firm's clearing firm with checks totaling $130,000 written on a closed account. (NASD Case #C8A010006)

A FEW CLARIFICATIONS FROM LAST MONTH

I must immediately confess to some "fuzzy math" of my own in my calculations last month. I wrote that the NASDAQ needed to rise 259% to regain the level it had reached in March 2000. In truth, it would have to rise to 259% OF its current level, which means that it only needed to rise 159% from this level to regain 5,000 again. And for that reason it wouldn't take 30 years to get there, but only 16 years or so at 6%.

I thank those of you who wrote to point this out to me including my old friend Joe Truppo. When I'm wrong, I'm wrong. Perhaps I was hoping that my math would actually end up being correct if the NASDAQ just dropped a bunch more. Oh well.

And if anyone is curious about my opinion of the current market rally, I have two very simple words for you: Bear Trap.

Don't believe it for a minute. Alan Greenspan's behavior illustrates that he scared you-know-whatless of this economy, which he must believe is in free fall. We haven't suffered long enough so I find it impossible to believe that the worst is over.

PERSONAL ADVICE

I was somewhat surprised how many people wrote me after last month's newsletter looking for clarification on my views for what seemed to be personal reasons. Well I was never that thrilled about giving people personal advice about their investments, even back when I used to get paid to do such things. Instead of giving any advice, let me clarify my thoughts from last month.

--The market has declined. I believe it might decline more and that it may under perform many other assets in the coming decade.
--I said that I thought there were many opportunities in the bond markets.
--Finally, I said that if you were still in the stock market, that it was important to "stay the course".

So here is what can be taken from those thoughts.

--If you had decided to commit a certain amount of your retirement assets to the stock market you should have been prepared to stay in and make new contributions at these new, lower values.
--If the stock market not rebounding during the next 10 years completely ruins your retirement plans, then you had too much in the stock market in the first place and you're screwed.
--If you have other monies you dedicate to trading outside your retirement, then there may be other, more exciting opportunities in other markets, so indulge.

People seem to have to intricately linked the stock market with their retirement. I know this is because so much of their retirement assets have been dedicated to the stock market, but perhaps this is the problem in the first place.

GRAND CAYMAN AND BERMUDA

The programs are final and posted on the website and I am extremely excited about them.

There will weeklong programs hosted by yours truly in Grand Cayman in July and Bermuda in November. Each day will be a seminar on a different topic relating to the financial markets. This translates into 10 completely different days of training all of which qualify for significant professional education credits.

The Cayman programs will be held at the terrific Hyatt Regency Grand Cayman Resort and the Bermuda week will be held at Fairmont Southampton Princess Hotel. Both are terrific resorts and have wonderful conference facilities.

For details please click the following links:

For Grand Cayman: http://www.afs-seminars.com/cayman.html

For Bermuda: http://www.afs-seminars.com/bermuda.html

http://www.afs-seminars.com

Copyright 2001, Michael Gasior. All Rights Reserved

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