United States of America
In the Matter of
|ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTIONS 15(b) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Stanslav Kaminsky ("Respondent").
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Order"), as set forth below.
On the basis of this Order and Respondent's Offer, the Commission finds1 that
1. Respondent, 25 years old, is a resident of Brooklyn, New York. From about April 1997 through November 1997, Respondent was a registered representative associated with W.J. Nolan and Co. ("W.J. Nolan"), a broker-dealer registered with the Commission. W.J. Nolan was headquartered in New York, New York and was a member of the New York Stock Exchange. Respondent worked at the W.J. Nolan office located at 381 South Park Avenue, New York, New York. From about April 1996 through November 1996, and from February 1998 to the present, Respondent was also a registered representative associated with other broker-dealers registered with the Commission.
2. During the period April 1997 through November 1997, Kaminsky engaged in fraudulent sales practices in the accounts of five customers at W.J. Nolan. His activities included churning, unauthorized trading and unsuitable trading.
3. Respondent made one or more trades without the customer's authority in the accounts of four of the customers. Respondent also purchased certain highly speculative, thinly traded micro cap securities priced below $5 per share in the accounts of four of the customers. Respondent failed to disclose the risks of these investments to the customers. These investments were unsuitable in light of the financial situations and investment objectives of the customers.
4. Respondent also engaged in churning in the accounts of three of the customers. Respondent exercised de facto control over the accounts of these three customers. The annualized turnover ratios in the three accounts ranged from 7 to 15.5, and the annualized break-even rates of return ranged from 66.3% to 155.1%. The trading in these accounts was excessive in light of the customers' investment objectives and financial needs. This excessive trading was also unsuitable for these customers.
5. Respondent acted with scienter. Respondent knowingly or recklessly engaged in the fraudulent sales practices described above for the purpose of generating commissions. Respondent earned $20,509 in commissions from these fraudulent transactions, and the customers incurred realized and unrealized losses totaling $92,746. Respondent knowingly or recklessly disregarded the customers' financial situations, investment objectives, and interests for his own financial gain.
6. W.J. Nolan maintained certain required customer account records that contained false information in violation of Section 17(a) of the Exchange Act and Rule 17a-3 thereunder. By failing to make and keep certain required records containing information that is true and correct, Respondent knowingly provided substantial assistance to W.J. Nolan in its violations.
7. As a result of the conduct described above, Respondent willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer and sale of securities and in connection with the purchase or sale of securities.
8. As a result of the conduct described above, Respondent caused and willfully aided and abetted W.J. Nolan's violations of Section 17(a) of the Exchange Act and Rule 17a-3 thereunder, which require that broker-dealers registered with the Commission make and keep current certain books and records.
Respondent has undertaken to:
Respondent shall provide the Commission, within thirty (30) days after the end of the twelve (12) month suspension period described below, an affidavit that he has complied fully with the sanctions described in Section IV. B., below.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent Kaminsky's Offer.
ACCORDINGLY, IT IS HEREBY ORDERED:
A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Respondent Kaminsky cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and from causing violations of Section 17(a) of the Exchange Act and Rule 17a-3 thereunder.
B. Pursuant to Section 15(b)(6) of the Exchange Act, Respondent be, and hereby is, suspended from association with any broker or dealer for a period of twelve (12) months, effective on the second Monday following the entry of this Order.
C. Respondent shall pay disgorgement and prejudgment interest in the total amount of $30,454. Respondent shall also pay a civil money penalty in the amount of $20,509.
D. Respondent shall pay disgorgement, prejudgment interest, and civil penalty plus postjudgment interest on the disgorgement and prejudgment interest pursuant to the following payment plan. Respondent shall pay $5,000 within thirty days of the date of issuance of this Order. Respondent shall next make four quarterly payments of $1,000 each, which payments must be hand-delivered or post-marked no later than the 15th day of April, July, and October 2003 and January 2004. Respondent shall then make four quarterly payments of $4,442.00 each, which payments must be hand-delivered or post-marked no later than the 15th day of April, July, and October 2004 and January 2005. Thereafter, Respondent shall make four quarterly payments of $6,235.70 each, which payments must be delivered or post-marked no later than the 15th day of April, July, and October 2005 and January 2006. Such payments shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies Kaminsky as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Kathryn A. Pyszka, Senior Trial Counsel, Securities and Exchange Commission, 175 West Jackson Boulevard, Ste. 900, Chicago, Illinois 60604.
E. Failure by Respondent Kaminsky to deliver any payment required by this Order on the dates prescribed and in the exact amounts due will, at the sole discretion of the Commission, render the entire remaining balance of the disgorgement and civil penalty amounts due and payable, and will constitute grounds for the Commission to institute proceedings against Kaminsky in Federal District Court to enforce compliance with the Commission's order.
F. Respondent shall comply with the undertakings enumerated in Section III., above.
By the Commission.
Jonathan G. Katz
1 The findings herein are made pursuant to Respondent's Offer and are not binding on any other person or entity in this or any other proceeding.
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