The Financial Industry Regulatory Authority Inc. is investigating Anastasios “Tommy” Belesis, the owner and chief executive of John Thomas Financial, for his role in alleged pump-and-dump stock scheme.
Last month, Finra sent Mr. Belesis a Wells notice, according to his profile on BrokerCheck. A Wells notice from Finra signifies that the self-regulator may commence disciplinary proceedings.
Finra alleges that Mr. Belesis, a regular guest on the Fox Business Channel, employed manipulative and potentially fraudulent means to buy and sell stock, the earmarks of a pump-and-dump scheme.
Mr. Belesis “willfully or recklessly sold a substantial portion of a firm proprietary position while failing to execute customer orders to sell shares of the same stock at prices that would have satisfied the unexecuted orders,” according to BrokerCheck. He also allegedly “failed to follow instructions by the customers to sell the shares.” In addition, Finra claims the John Thomas CEO artificially inflated the price of stock.
"Finra staff has advised that it intends to recommend that a proceeding be brought making allegations along the lines set forth in the notification,” said John Thomas spokesman David Pitts. “It is the policy of John Thomas Financial not to comment on pending regulatory matters. If a proceeding is brought, JTF intends to vigorously contest and defend the matter."
Last week, the New York Post reported that Mr. Belesis was under investigation by the FBI, the Securities and Exchange Commission and Finra. InvestmentNews also reported that several ex-brokers of John Thomas Financial had filed court affidavits stating that Mr. Belesis ran a pump-and-dump stock scheme. The alleged scheme involved Liberty Silver Corp., a penny stock that the SEC ordered to stop trading for two weeks in October.
Those court filings were part of a response to a lawsuit filed against the brokers by John Thomas.
Meanwhile, management at John Thomas believes “there is not a stitch of evidence that any sort of Justice Department inquiry is ongoing,” Mr. Pitts said. “No one at JTF has been contacted.”
“We doubt the Justice Department is in the habit of leaking inquiries, and, if an inquiry was going to be leaked, that it would be to the New York Post,” he said. “Notably, the Post does not state that its source is anyone in the Justice Department. JTF has reason to believe that a disgruntled former employee, who was terminated for cause at JTF's request for improper conduct, is at the root of this rumor. JTF is taking appropriate legal action against him.”
Finra also alleged that Mr. Belesis made “material misrepresentations to customers, registered reps and Finra about the reasons why the customer orders had not been executed.” The industry regulator also accused the firm of falsifying or failing to keep pertinent records of the stock orders in question.
Meanwhile, some members of John Thomas' investment banking team have left the firm to work under the aegis of another small New York brokerage, Corinthian Partners LLC. Avi Mirman, the former managing director of investment banking at the now-defunct GunnAllen Financial Inc., joined Corinthian Partners on Friday.
John Thomas has strong connections to Corinthian Partners. Mr. Belesis' brother, George, is president of John Thomas but also a minority owner of Corinthian Partners through an outside holding company. Tommy Belesis has no stake in Corinthian.
The two firms are close in other ways, as well. Corinthian Partners now occupies space in John Thomas' offices at 14 Wall St. “I think they're trying to slither away to Corinthian,” said Richard Roth, an attorney who represented the ex-John Thomas brokers in the suit. Mr. Roth said the suit was dropped. Mr. Pitts said it had not been dropped.
John Thomas' problems will likely drag on, Mr. Roth said. “I don't think the Wells notice is the end of the investigation.”