U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19126 / March 9, 2005
SECURITIES AND EXCHANGE COMMISSION v. FRANK FURINO, CV-05 1259 (E.D.N.Y.)
The Securities and Exchange Commission (“Commission”) today filed a civil injunctive action in the United States District Court for the Eastern District of New York against Frank J. Furino (“Furino”), a former floor clerk on the New York Stock Exchange (“NYSE”), alleging securities fraud. The Commission’s complaint alleges that from approximately August 2000 through December 2001, Furino provided a day trader with confidential information about unexecuted customer orders, and the day trader then traded ahead of those orders.
The complaint was filed against:
More specifically, the complaint alleged the following. As a floor clerk, Furino had access to the purchase and sell orders of the floor broker’s customers. Furino routinely informed the day trader by telephone of the security, quantity, price, and side (buy or sell) associated with large customer orders, after the floor broker received, but before it executed, these orders. On at least 58 occasions, the day trader used the information obtained from Furino to trade ahead of the floor broker’s customers. For example, after Furino informed the day trader about a customer’s block order to purchase shares of Computer Associates International, Inc. stock on October 25, 2000, the day trader bought 17,000 shares of Computer Associates stock at an average price of $28.27. Within one minute, the day trader sold the 17,000 shares of Computer Associates stock through the floor broker at $29 per share, at the same time that the floor broker’s customer’s buy order for 84,500 shares was executed. The rise in share price resulted in the day trader making a profit of approximately $12,091. Overall, the day trader made more than $300,000 from this scheme. Additionally, the day trader compensated Furino for the confidential order flow information through undisclosed cash payments (approximately $50,000) and commissions.
The Commission charged Furino with violating Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The Commission seeks a permanent injunction against future violations of these provisions, disgorgement plus prejudgment interest, and civil penalties.