FINRA Shuts Down California Broker Linked To Online Penny Stock Manipulation Scheme

Tuesday, April 05, 2011 21:35
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FINRA Shuts Down California Broker Linked To Online Penny Stock Manipulation Scheme

Tags: FINRA | fraud

Suspicious movements in several normally illiquid stocks raised red flags at FINRA as early as 2005, eventually getting the brokerage firm at the center of the trades shut down over a dismal $300,000 in commissions.

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AIS Financial of Westlake Village, California, has been expelled from the industry for "turning a blind eye" to several customers -- some with known records for securities fraud and money laundering -- who moved billions of very low-priced shares onto its platform and then dumped them at a profit.

 

FINRA determined that the trades were extraordinarily lucrative for the clients but represented fairly pitiful margins for AIS. One Costa Rica-based client booked about $3 million trading various stocks, but AIS only made $53,000 on the account.

 

Another group of clients raked in roughly $5 million trading a now-extremely-illiquid bulletin board stock. AIS posted $243,000 in commissions on the trades.

 

Given the ongoing crackdown on penny stock manipulation throughout the industry, this was perhaps inevitable. Undoubtedly a lot more ahead. 

 

 

 

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