The Financial Industry Regulatory Authority (FINRA) recently announced that it has expelled Meeting Street Brokerage, LLC of Palm City, FL from the securities industry for market manipulation of Relay Capital Corporation stock — as well as for violations of Regulation T, Anti-Money Laundering (AML) rules, instant message retention requirements, registration requirements and net capital requirements.
FINRA barred Meeting Street broker Lisa A. Esposito for participating in the manipulation and for violating Regulation T. FINRA sanctioned her husband, Vincent A. Esposito, the firm’s owner, principal and AML Compliance Officer, for those same violations and for violations of his AML obligations. Vincent Esposito was suspended from associating with a securities firm in any capacity for 90 days, suspended from associating with a securities firm in a principal capacity for two years and fined $15,000.
FINRA found that in 2005, Meeting Street and the Espositos participated in a manipulative scheme designed to increase and/or maintain artificially the price and volume of a Pink Sheet-traded stock issued by Relay Capital. Relay Capital was first incorporated in Canada in 2002 as First Canadian American Credit Services, later relocating to Nevada and changing its name to Galloway Oil and Gas, Inc. Relay Capital currently reports that it is in the business of marketing pre-paid financial services.
In its investigation, FINRA found that Meeting Street and the Espositos participated in the manipulation of Relay Capital stock by:
• placing approximately 100 matched orders for the firm’s customers — i.e., prearranged orders for the purchase and/or sale of the stock for the purpose of creating the false appearance of high trading volume and inflating or maintaining the stock’s price.
• transferring free shares of the stock to customers who had purchased or agreed to purchase additional shares of the stock;
• continually allowing customers to purchase the stock without sufficient funds to do so and without a good faith belief that they would pay for their purchases before selling the stock; and
• effecting nearly 100 purchases for customers in which the cost to buy the stock was met by the sale of the same stock.
FINRA also found that Meeting Street and the Espositos effected certain agency cross trades between customers at prices in excess of the price at which Relay Capital stock traded on the date of the transactions. FINRA further found that a consulting company owned and controlled by Lisa Esposito received over 1.2 million shares of Relay Capital stock as payment for consulting services and that Meeting Street generated $289,000 in commissions in 2005 for placing Relay Capital stock trades.
FINRA also found that Meeting Street and the Espositos committed numerous violations of Regulation T, many of which were in furtherance of the manipulation, and that Meeting Street and Vincent Esposito, the firm’s AML Compliance Officer, violated their AML obligations by failing, in several instances between 2005 and 2007, to investigate and report suspicious activity.
In concluding this settlement, Meeting Street and the Espositos neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
Meeting Street’s principals are Vincent Esposito and Hendrik Steenhuysen. The firm cleared its trades through Penson Financial Services. In addition to the foregoing regulator finding, it appears that Meeting Street has been investigated by regulators on at least two other occasions regarding potential securities fraud.
If you have any questions about investments you made with Meeting Street or if you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak with a securities attorney, please call our Chicago office at 312-238-9650 for a free consultation.
The White Law Group is a national securities fraud, arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group visit http://www.whitesecuritieslaw.com