MORRISON ORDERS NEW YORK BROKER-DEALER FIRM TO CEASE AND DESIST
Auditor Alleges Securities Fraud Committed Against Polson Investor
Montana State Auditor John Morrison filed a disciplinary action and cease and desist order against Ehrenkrantz King Nussbaum Financial Services (EKN), a New York broker-dealer firm. The action also names stockbrokers Larry Lubarsky, Igor Sirota, Thomas Giugliano, George Tamborello and Gabriel Iezzoni. The Auditor alleges EKN, Lubarsky, Sirota and Giugliano committed securities fraud against a Polson investor and alleges Tamborello and Iezzoni failed to supervise these EKN brokers.
In July 2004, the Polson investor opened an account at EKN with instructions that he wanted conservative investments with growth and income potential. Instead of following the investor’s instructions, Lubarsky, Sirota and Giugliano engaged in a pattern of excessive and unsuitable trading in his account, executing at least 195 trades in a 16-month period in speculative stocks, and charging excessive fees and commissions amounting to over $141,000. The investor’s EKN investment portfolio would have had to grow at a rate of 81.99% during the 16-month period for the investor to simply break even. Instead, the investor lost over $62,000.
“While we deal aggressively with cases like this, we also try to prevent financial fraud through investor education,” said Morrison. “Because knowledge is an investor’s best defense against fraud, we developed a comprehensive investor education program called InvestSmart Montana. This program helps Montanans recognize financial schemes like churning and unsuitable trading.”
The action seeks restitution for the victim, fines and the suspension and/or revocation of each of the named respondents’ securities license in the State of Montana. Meanwhile, Morrison imposed a temporary cease and desist order to prevent the named respondents from engaging in any activity that violates the Montana Securities Act.
“Our office works hard every day to prosecute firms and brokers and to make the victims whole", said Morrison “but we know that the best kind of law enforcement is to prevent the crime in the first place. That’s what InvestSmart is all about – giving investors the tools that they need to protect themselves from fraud.”
For Montanans wanting to learn more about protecting themselves from financial fraud, Auditor Morrison encourages them to request a copy of the documentary “Fraud Under the Big Sky”. The documentary highlights two high-profile securities cases prosecuted by the Auditor’s Office and includes important information on how to recognize, detect and prevent securities fraud. The documentary was funded by the Investor Protection Trust and produced by InvestSmart. For more information log onto www.InvestSmartMT.org or call 1-800-603-6035.