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AOC Securities, ex-CEO penalized for role in inflated MBS pricing scheme

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AOC Securities, ex-CEO penalized for role in inflated MBS pricing scheme

AOC Securities LLC and its former CEO Ronaldo Gonzalez agreed to pay penalties for failing to supervise Frank Dinucci Jr., a company broker, for giving inflated price quotes for certain securities to Premium Point Investments LP, a company customer.

The Securities and Exchange Commission ordered AOC Securities to pay $250,000 and Gonzalez to pay $40,000. It also censured the company and imposed a 12-month supervisory bar on Gonzalez. The company and its former CEO neither admitted nor denied the SEC's findings.

According to the SEC's complaint, Premium Point traders dictated to Dinucci the prices at which he would value certain mortgage-backed securities in the hedge fund's portfolios, and in return, the traders would send the MBS to AOC Securities. The SEC alleged that although both the company and Gonzalez knew Dinucci was providing the price quotes on behalf of the broker-dealer, they did not implement policies designed to prevent and detect such misconduct.

AOC Securities withdrew its broker-dealer registration at the end of 2018 during the course of the regulator's investigation, the SEC said.