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U.S. Securities and Exchange Commission


SEC v. Robert J. Monski, Civ. Action No. 1:01CV00943 (D.D.C.) (filed May 3, 2001)

Litigation Release No. 16986 / May 3, 2001


On May 3, 2001, the Commission entered a settled cease-and-desist order against Robert J. Monski, a self-employed investor living in Birmingham, Alabama. The order finds that between early October and mid-November 1997, Monski placed hundreds of small buy and sell limit orders (typically the one-hundred share minimum necessary to trigger the display requirement) to affect the National Best Bid or Offer (NBBO) of thinly traded stocks. Monski used the change in the NBBO that resulted from his limit order, as required by the Limit Order Display Rule, Rule 11Ac-4, to trigger execution of pre-existing, significantly larger "all or none" limit orders he had placed on the other side of the market. Monski intended to use small limit orders to move the NBBO quote to meet the execution price of larger "all or none" limit orders which were purposefully placed with one of the many brokers that guarantee execution of customer orders of 1000 to 3000 shares at the NBBO regardless of the size of the NBBO quote. After moving the bid or offer quote to the desired price, Monski immediately attempted to cancel the small order. In this manner, Monski manipulated the public quote to obtain better execution prices for hundreds of orders.

The order finds that Monski's conduct, known in the industry as "spoofing", violated the antifraud provisions, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations, Monski consented to the entry of an order requiring him to cease and desist from violating these provisions, and requiring him to pay disgorgement and pre-judgment interest totaling $15,000. At the same time, Monski consented to the entry of a final judgment in federal court requiring him to pay a $10,000 civil penalty. SEC v. Robert J. Monski, Civ. No. 1:01CV00943 (D.D.C.).