UNITED STATES OF AMERICA
|In the Matter of
RICHARDT-ALYN & CO.,
|ORDER MAKING FINDINGS,
SANCTIONS AND ORDERING
RESPONDENTS TO CEASE
On September 26, 1996, the Securities and Exchange Commission instituted public administrative proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Respondents Richardt-Alyn & Co. ("Richardt-Alyn"), Richard B. Feinberg ("R. Feinberg"), and Alan S. Feinberg ("A. Feinberg").
In response to the institution of these administrative proceedings, Respondents Richardt-Alyn, R. Feinberg and A. Feinberg have submitted an Offer of Settlement ("Offer") that the Commission has determined to accept. Solely for the purposes of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except those contained in paragraphs II.a., b. and c. below, which are admitted, Richardt-Alyn, R. Feinberg and A. Feinberg consent to the issuance of this Order Making Findings, Imposing Remedial Sanctions and Ordering Respondents to Cease and Desist ("Order").
On the basis of this Order and the Offer submitted by Richardt-Alyn, R. Feinberg and A. Feinberg, the Commission makes the following findings:
a. Richardt-Alyn has been registered with the Commission as a broker-dealer pursuant to Section 15 of the Exchange Act since September 1971. Richardt-Alyn's office is located in Cherry Hill, New Jersey.
b. R. Feinberg is a trader for Richardt-Alyn and is responsible for Richardt-Alyn's compliance with the federal securities laws.
c. A. Feinberg is a trader for Richardt-Alyn and is responsible for maintaining Richardt-Alyn's books and records.
d. Richardt-Alyn operated from the floor of the Philadelphia Stock Exchange ("PHLX") and was an equity specialist. Richardt-Alyn derived almost all of its income from exchange specialist activities and most of its remaining income from brokerage commissions.
e. A small percentage of Richardt-Alyn's business is over-the-counter ("OTC") trading. Between January 1994 and March 1995, Richardt-Alyn executed OTC transactions primarily with four broker-dealers. During this period, Richardt-Alyn had an arrangement with these broker-dealers for OTC trades. Richardt-Alyn had a Nasdaq Stock Market ("Nasdaq") Workstation II, which it used to execute trades of stocks listed on Nasdaq. Richardt-Alyn is not a market maker in any Nasdaq-listed or other OTC securities.
f. During the period from in or about January 1994 to March 1995, Respondent Richardt-Alyn, acting by and through R. Feinberg and A. Feinberg, willfully violated Section 17(a)(2) and (3) of the Securities Act and Section 17(a) of the Exchange Act and Rule 17a-3 thereunder, in that, in connection with certain OTC trades with four broker-dealers (DLA, Syosset, New York; Flagship Securities, Inc., Syracuse, New York; Park Avenue, Philadelphia, Pennsylvania; and Birchwood Securities Corp., Philadelphia, Pennsylvania), it provided information to these broker-dealers that the transactions were completed at the national best bid or offer price ("NBBO"), and did not inform them that, on certain occasions, Richardt-Alyn purchased or sold the same stock on Selectnet at a price better than the NBBO. Richardt-Alyn also prepared trading records that reflected the same. In this manner, Richardt-Alyn earned a total of $17,477 in trading profits.
g. During the period from in or about January 1994 to March 1995, Respondents R. Feinberg and A. Feinberg, acting as control persons of Richardt-Alyn, as that term is defined in Section 15 of the Securities Act and Section 20(a) of the Exchange Act, willfully violated Section 17(a)(2) and (3) of the Securities Act and Section 17(a) of the Exchange Act and Rule 17a-3 thereunder.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Respondents Richardt-Alyn, R. Feinberg and A. Feinberg and impose the sanctions and other measures specified therein.
Accordingly, IT IS HEREBY ORDERED that:
1. The Initial Decision in this matter dated September 30, 1999 is set aside;
2. Richardt-Alyn, R. Feinberg and A. Feinberg shall cease and desist from violating and committing future violations of Section 17(a)(2) and (3) of the Securities Act and Section 17(a) of the Exchange Act and Rule 17a-3 thereunder;
3. Richardt-Alyn, R. Feinberg and A. Feinberg are censured;
4. Richardt-Alyn shall comply with the undertaking that, within 30 days of the entry of this Order, it will pay the following amounts: DLA, $7,958; Flagship Securities, $7,819; Park Avenue, $325; Birchwood Securities Corp., $1,375; for the total sum of $17,477. Richardt-Alyn shall further comply with the undertaking to provide proof of compliance with this undertaking no later than 30 days from the date of entry of this Order in the form of an affidavit filed with the Commission's staff that includes a schedule showing the respective payments sent; and
5. R. Feinberg and A. Feinberg each shall pay a civil money penalty in the amount of $5,000 to the United States Treasury within 30 days of this Order. Such payment 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) mailed to the Comptroller, Securities and Exchange Commission, 6432 General Green Way, Suite B, Mail Stop 0-3, Alexandria, Virginia 22312; and (d) submitted under cover letter which identifies R. Feinberg and A. Feinberg as respondents in these proceedings, as well as the Commission's case number. A copy of said cover letter and money order or check shall be sent to Ronald C. Long, District Administrator, Securities and Exchange Commission, The Curtis Center, Suite 1120E, 601 Walnut Street, Philadelphia, PA 19106.
By the Commission.
Jonathan G. Katz
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