In the Matter of Linkbrokers Derivatives LLC
Admin. Proc. File No. 3-16017
In the Matter of Aaron Nowak
Admin. Proc. File No. 3-16999
On August 14, 2014, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Linkbrokers Derivatives LLC (“Linkbrokers”), a New York based interdealer broker. In the Order, the Commission found that, from at least 2005 through at least February 2009, on over 36,000 customer transactions, certain employees, including Aaron Nowak (“Nowak”), of Linkbrokers perpetrated a fraudulent scheme by charging customers false prices in which Linkbrokers embedded hidden markups or markdowns resulting in Linkbrokers unlawfully taking secret profits of more than $18 million at the expense of its customers. The Commission ordered Linkbrokers to pay $14,000,000.00 in disgorgement (“Distribution Fund”). See Commission’s order: Release No. 34-72846.
On September 5, 2014, the Commission issued an order appointing Damasco & Associates LLP (“Damasco”) as the Tax Administrator of the Distribution Fund. Damasco was acquired by Miller Kaplan Arase LLP, and on June 30, 2017, the Commission issued a notice of name change for the Tax Administrator.
On August 28, 2015, the Commission issued an order appointing Rust Consulting, Inc., as the Fund Administrator of the Distribution Fund and set the administrator’s bond amount. See Commission’s order: Release No. 34-75784.
On December 11, 2015, the Commission instituted and simultaneously settled a related administrative and cease-and-desist proceedings against Nowak, for his negligent participation in the fraudulent scheme as a registered representative associated with Linkbrokers. The Commission ordered Nowak to pay a civil money penalty of $5,000.00 and created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the penalties paid could be distributed to harmed investors. The Commission further ordered that the Fair Fund be transferred and combined with the funds previously collected pursuant to the Order and distributed in accordance with the proposed distribution plan in that matter. See Commission’s order: Release No. 33-9988.
On August 15, 2016, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provided persons 30 days to submit their comments on the Proposed Plan. See Commission’s notice: Release No. 34-78577, and the Proposed Plan.
For more information, please contact the Fund Administrator.