Securities Act of 1933
Release No. 7698 / July 7, 1999
Securities Exchange Act of 1934
Release No. 41601 / July 7, 1999
File No. 3-9933
PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS INSTITUTED AGAINST A.S. GOLDMEN & CO., INC., ANTHONY J. MARCHIANO, STUART E. WINKLER AND FORMER REGISTERED REPRESENTATIVES OF GOLDMEN
The Securities and Exchange Commission announced today the institution of administrative and cease-and-desist proceedings against A.S. Goldmen & Co., Inc. ("Goldmen"), a registered broker-dealer. Also charged in the proceedings are:
Anthony J. Marchiano ("Marchiano"), of Naples, Florida, Goldmen's president and sole owner; Stuart E. Winkler ("Winkler"), of Morganville, N.J., Goldmen's financial and operations principal; John T. Diasabeyagunawardena (a.k.a. John Abbey) ("Abbey"), of Metuchen, N.J.; John P. DelCioppo ("John DelCioppo"), of Naples, Florida; Christopher M. DelCioppo ("Chris DelCioppo"),of Tampa, Florida; Vincent J. Lia ("Lia"), of Naples, Florida; Duane P. Taylor ("Taylor"), of Naples, Florida; and Charles Trento ("Trento"), of Forked River, N.J. Abbey, John DelCioppo, Chris DelCioppo, Lia, and Taylor, were all registered representatives in Goldmen's Naples, Florida office. Trento was a registered representative in Goldmen's New Jersey Office.
The order instituting proceedings charges Goldmen, Marchiano, Winkler and the former registered representatives with five interrelated schemes that occurred between July 1994 to June 1998:
First, from April 1997 to April 1998, Goldmen, Marchiano and Winkler violated the registration and prospectus delivery provisions of the federal securities laws by conducting an unregistered offering of over 3 million shares of the common stock of Millennium Sports Management, Inc. ("Millennium"), a publicly-traded New Jersey corporation, and by failing to deliver Millennium prospectuses to Goldmen's retail clients who bought Millennium stock during the unregistered offering. Goldmen realized net proceeds of at least $7.5 million through the sale of Millennium stock during this period.
Second, from July 1997 to June 1998, Marchiano, Abbey, John DelCioppio, Chris DelCioppio, Lia, and Taylor engaged in a scheme to sell Millennium common stock to retail clients using a variety of fraudulent and deceptive sales practices. Under Marchiano's direction, Goldmen's Naples, Florida office became a "boiler room" that sold Millennium common stock through an aggressive cold-calling campaign involving high-pressure sales tactics, misrepresentations and omissions of material facts, baseless price predictions, unauthorized purchases, and an undisclosed no net-selling practice.
Third, from July 1994 to February 1997, Goldmen and Winkler violated the antimanipulation provisions of the federal securities laws. During at least six initial public offerings ("IPOs") underwritten by Goldmen, Winkler placed IPO securities into at least four nominee accounts. Winkler then had Goldmen immediately repurchase the securities after the IPOs at a substantial profit and resell them to bona fide investors at yet higher prices. While these IPO securities were in his nominee accounts, Winkler had Goldmen commence market making activities in the securities. The antimanipulation provisions of the federal securities laws prohibited Goldmen from engaging in such market making activity while IPO securities remained under Winkler's control in the nominee accounts. The Winkler nominee accounts made at least $253,500 from this scheme.
Fourth, during the same period, Goldmen, Winkler, and Marchiano violated the antimanipulation and antifraud provisions in a similar scheme designed to resolve client complaints. Winkler and Marchiano placed IPO securities into the accounts of complaining clients during various IPOs underwritten by Goldmen and controlled the repurchase and resale of the securities, guaranteeing those clients a profit. While these securities remained under Winkler's and Marchiano's control in the client accounts, Goldmen commenced making markets in the securities. In one instance, Winkler and Marchiano placed nearly 30 percent of the IPO warrants into the accounts of complaining clients. This scheme also violated the antifraud provisions by creating a materially false impression of the nature and extent of investor interest in the offerings and aftermarket for the IPO securities.
Fifth, from July 1994 to May 1997, Trento engaged in a pattern of fraudulent sales practices. These practices included: the use of nominee accounts to hide his financial interest in certain sales of securities; engaging in fraudulent cross-trading; making baseless price predictions; executing unauthorized and unsuitable trades; and engaging in an undisclosed no net-selling practice.
In addition to the schemes described above, Winkler is charged with instructing certain Goldmen employees, including Goldmen's compliance director, to falsify, conceal and destroy various required books and records, including trade blotters, trade tickets, and customer complaints. The order alleges that Winkler did so to conceal from regulators, among other things, evidence of sales practice abuses, as well as other violations of federal and state securities laws.
The order charges that, as a result of this conduct, Goldmen willfully violated Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 17(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 10b-6, 17a-3, and 17a-4 thereunder. Marchiano willfully violated Sections 5 and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rules 10b-5 and 10b-6 thereunder. Winkler willfully violated Section 17(a) of the Securities Act, Sections 10(b) of the Exchange Act, and Rules 10b-5 and 10b-6 thereunder, and willfully aided and abetted or caused violations of Section 5 of the Securities Act, Section 17(a) of the Exchange Act, and Rules 17a-3 and 17a-4 thereunder. Abbey, John DelCioppio, Chris DelCioppio, Lia, and Taylor willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. Trento willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and willfully aided and abetted or caused violations of Section 17(a) of the Exchange Act and Rule 17a-3 thereunder.
The Division of Enforcement thanks the New York County District Attorney's Office, the National Association of Securities Dealers (NASD), and the New Jersey Bureau of Securities for their assistance in the investigation.
This proceeding has been instituted pursuant to Section 8A of the Securities Act and Sections 15(b)(4), 15(b)(6), and 21C of the Exchange Act. A hearing will be held before an administrative law judge to determine whether the allegations against the proposed respondents are true, and if so, to determine what remedial sanctions are appropriate and in the public interest, and whether the proposed respondents should be ordered to pay disgorgement and/or civil penalties.