|[November 08, 2012]
FINRA Expels Hudson Valley Capital Management and Bars CEO for Defrauding Clearing Firm and Customers
WASHINGTON --(Business Wire)--
The Financial Industry Regulatory Authority (FINRA) announced today that
it has expelled NY-based Hudson Valley Capital Management and barred
Chief Executive Officer, Mark Gillis, from the securities industry for
defrauding its clearing firm and customers by using their funds and
securities to cover losses caused by Gillis' manipulative day trading.
FINRA found that in 2012, Hudson Valley, acting through Gillis, used the
firm's Average Price Account to improperly day trade millions of dollars
of stock. Gillis then manipulated the share prices of these stocks and
withdrew the proceeds of his day trading through accounts he controlled.
When Gillis' fraudulent trading caused significant losses in the firm's
account, he covered those losses by making unauthorized trades involving
customer accounts. Gillis purchased thousands of shares of securities in
the open market in the firm's account and allocated these shares to
customers at markups between 177 percent and 280 percent. Gillis also
converted a customer's funds to pay for an unauthorized stock purchase
and caused another customer to sustain a loss of approximately $400,000.
When confronted about unauthorized trades that occurred in their
accounts, Gillis lied to two customers about the transactions to hide
his misconduct, and lied to FINRA staff during sworn testimony.
Cameron Funkhouser, Executive Vice President of FINRA's Office of Fraud
Detection and Market Intelligence, said "FINRA strives to quickly
address egregious broker misconduct. In this instance, FINRA fully
investigated Mr. Gillis and Hudson Valley Capital Management within
weeks of Gillis perpetrating his fraudulent scheme, and obtained
evidence that led to the disciplinary action announced today."
Hudson Valley failed to supervise Gillis' trading activities at the
firm; thus, Gillis was able to conduct his fraudulent trading scheme
without restriction. Gillis' scheme caused a net capital deficiency for
Hudson Valley in excess of $350,000.
FINRA's investigation was conducted by the Office of Fraud Detection and
Market Intelligence, the Department of Member Regulation Sales Practice
and the Department of Enforcement.
Investors can obtain more information about, and the disciplinary record
of, any FINRA-registered broker or brokerage firm by using FINRA's
BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2011,
members of the public used this service to conduct 14.2 million reviews
of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck
or by calling (800) 289-9999. Investors may find copies of this
disciplinary action as well as other disciplinary documents in FINRA's
Disciplinary Actions Online database.
FINRA, the Financial Industry Regulatory Authority, is the largest
independent regulator for all securities firms doing business in the
United States. FINRA is dedicated to investor protection and market
integrity through effective and efficient regulation and complementary
compliance and technology-based services. FINRA touches virtually every
aspect of the securities business - from registering and educating all
industry participants to examining securities firms, writing rules,
enforcing those rules and the federal securities laws, informing and
educating the investing public, providing trade reporting and other
industry utilities, and administering the largest dispute resolution
forum for investors and firms. For more information, please visit www.finra.org.
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