According to a recent InvestmentNews article, the Financial Industry Regulatory Authority (FINRA) expelled 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. FINRA also suspended Stephen Zipkin, a registered representative at Hallmark for two years and required him to pay $18,000 in restitution to affected customers. At least 53 customers were affected by the fraudulent scheme. Allegedly, Dash and Zipkin used manipulative trading and misleading trade confirmations to sell nearly 40,000 shares of Avalanche company stock that the firm owned to 14 customers at fraudulently inflated prices. Mr. Dash allegedly then used a pre-arranged trading scheme to sell these shares to the customers at $3 per share when the public offering price for the shares was just over $2. Hallmark sold shares of the same company to other customers at prices as low as 80 cents. Neither Hallmark nor Dash or Zipkin ever disclosed to the customers that the shares they were purchasing belonged to Hallmark, that the firm was charging extraordinary markups on the transactions and that the firm was selling Avalanche shares to other customers during the same period at much lower prices, or that they could be purchased for lower prices on the open market. Dash and Zipkin were also accused of failing to respond to FINRA for documents and information and failing to maintain required minimum net capital.
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