Broker-Dealer Litigation - Greenberg Traurig LLP

Q.1.e(ii)
In re Huntleigh Sec. Corp., Release No. 64336, 2011 SEC LEXIS 1439 (Apr. 25, 2011)
The Commission accepted an offer of settlement from Huntleigh Securities Corp., a
registered broker-dealer, and Jeffrey Christanell. The Commission alleged that Christanell, a
registered representative, executed a series of “marking the close” trades at the request of a third
party SEC-registered investment adviser. The Commission further alleged that Huntleigh failed
to supervise Christanell by failing to establish procedures, or implement existing policies and
procedures, designed to prevent and detect such unlawful trading. The Commission ordered
Christanell to cease and desist from future violations of Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder, barred him from association with the right to reapply
after one year and ordered him to pay a $15,000 civil penalty. The Commission censured
Huntleigh and ordered it to comply with undertaking to implement improved compliance
procedures. Based on Huntleigh’s representation regarding its inability to pay, the Commission
did not impose a civil penalty.
Q.1.e(ii)
SEC v. Fareri, Litig. Release No. 21874, 2011 SEC LEXIS 819 (S.D. Fla. Mar. 7, 2011); In re
Fareri, Release No. 64413, 2011 SEC LEXIS 1591 (May 5, 2011).
An administrative law judge entered a default order against Fareri, a former registered
principal of Fareri Financial Services (the “Firm”), a registered broker-dealer. In an earlier
proceeding brought by the Commission, a federal district court entered a final judgment by
default against Fareri, the Firm, and Anthony Fareri & Associates, Inc., a relief defendant. The
court’s order permanently enjoined Fareri and the Firm from future violations of the antifraud
provisions of the federal securities laws. Additionally, the court ordered Fareri to pay
disgorgement of $1,840,703, prejudgment interest of $667,032, and a $100,000 civil penalty, and
barred him from participating in an offering of penny stock. Under the order, the Firm was
jointly and severally liable for $160,704 of the disgorgement, and Anthony Fareri & Associates
was jointly and severally liable for $820,000 of the disgorgement plus prejudgment interest of
$297,150. The Commission’s complaint alleged that Fareri defrauded his customers of more
than $4.7 million by purchasing and acquiring worthless shares of two shell companies for their
accounts and creating an artificial market for the two stocks by using pre-arranged matched
orders to create the illusion of market demand. Additionally, Fareri received secret kickbacks
totaling more than $1 million. The ALJ barred Fareri from association.
In re Feinblum, Release No. 64575, 2011 SEC LEXIS 1893 (May 31, 2011).
Q.1.e(ii)
The Commission accepted an offer of settlement from Feinblum, a registered
representative with a registered broker-dealer (the “Firm”). The Commission alleged that
Feinblum and his direct report executed numerous swap trades in certain securities that created
net risk positions substantially in excess of internal risk trading limits. To conceal these
excessions, Feinblum entered and then cancelled fake swap orders which had the effect of
temporarily and artificially reducing the net risk positions in the securities as recorded in the
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