First Quarter SEC Enforcement Cases Reveal Trends, Action Items
for Broker-Dealers
The U.S. Securities and Exchange Commission (SEC) had an active
first calendar quarter, announcing 10 settled enforcement actions
sanctioning failures to supervise.
The SEC has continued its long-standing practice of holding both
firms and individual supervisors responsible for supervisory
violations. For example, the SEC brought a settled action against
Newbridge Securities and its head trader, Eric Vallejo, alleging
their failure to detect and prevent manipulation and unregistered
distribution of penny stocks by a registered representative. The
violations arose within the context of a typical manipulation fact
pattern. The SEC alleged that Mr. Vallejo had noticed a price
increase in one of the stocks and had access to information showing
that the representative had placed a large number of successively
higher bids in the stocks, which was inconsistent with the
representative's
