The Financial Industry Regulatory Authority expelled Hallmark Investments Inc. and barred its CEO, Steven Dash, over a scheme that used manipulative trading to sell shares to customers at fraudulently inflated prices.
The regulator also suspended Hallmark Investments representative Stephen Zipkin for two years and required him to pay more than $18,000 in restitution to affected customers.
Hallmark Investments, Dash and Zipkin allegedly used an outside brokerage company, manipulative trading and misleading trade confirmations to sell nearly 40,000 Avalanche shares that it owned to 14 customers at fraudulently inflated prices. At Dash's order, Hallmark Investments allegedly used a pre-arranged trading scheme to sell the shares to customers at $3 apiece when the public offering price for the shares was $2.05 per share. Hallmark Investments sold Avalanche shares to other customers at prices as low as 80 cents, according to the regulator.
Hallmark Investments, Dash and Zipkin also did not disclose to the customers that the company owned the shares they were buying and was charging extraordinary markups on the transactions. They also did not inform the customers that the Avalanche shares were being sold to other customers at much lower prices or that the shares could be bought for a lower price on the open market.
Hallmark Investments and Dash were charged with failing to respond to numerous requests for documents and information from FINRA. FINRA also found that the company failed to maintain the required minimum net capital.
Hallmark Investments, Dash and Zipkin settled the matter without admitting nor denying the charges.