The rise and fall of Anastasios “Tommy” Belesis, the notorious owner and CEO of the defunct independent broker-dealer John Thomas Financial, is now complete.
And the financial advice industry will not miss him.
Once recognized for his snug, wide-striped suits and shaved pate with a baby-oil shine, Mr. Belesis has been in and out of the news for an assortment of alleged securities violations and improprieties for the past two years.
A
Financial Industry Regulatory Authority Inc. hearing panel issued a decision Jan. 9
barring him from the securities industry. In an anomaly perhaps unique to the securities business, Mr. Belesis
had already been barred from working with a broker-dealer or an investment adviser. The Securities and Exchange Commission barred him in December 2013 for separate issues involving an outside
hedge fund manager allegedly placing John Thomas' interests before those of its clients.
He has been ordered to pay more than $1 million in restitution to John Thomas clients for trading in front of their stock. Adding to his résumé of ill will, Mr. Belesis was fined $100,000 for harassing registered representatives — another violation of industry rules — who were fleeing John Thomas months before it shut down in July 2013.
(Related: 10 of the biggest regulatory fines of 2014)
The panel's decision is in response to the complaint Finra's enforcement division filed in April 2013 against Mr. Belesis, John Thomas and several top employees. Most seriously, the complaint alleged that they
conspired to defraud clients in 2012 by front-running trades of a penny stock, America West Resources Inc. (AWSR). John Thomas had raised $20 million for AWSR from 2008 to 2011 via a series of private securities offerings and bridge financing.
In a positive for Mr. Belesis and his former team, the panel found that they had committed no such fraud and had constructed no conspiracy. He has 45 days to appeal the decision.
That's about the extent of the good news for him.
According to
the panel's decision — 103 pages examining in detail the 10 separate charges of rule-breaking from Finra's original complaint — Mr. Belesis committed some of the most egregious sins in the securities industry. He was callous to his clients and registered reps, and prioritized his and John Thomas' interests over theirs, the decision states.
(More: Read the full complaint here)
Trading at 28 cents per share, America West's stock suddenly spiked to $1.80 per share one afternoon in February 2012. John Thomas owned 1.1 million shares of AWSR, and its clients owned 20 million shares.
John Thomas brokers rushed to dump their clients' positions and reap tidy profits. But those orders were blocked because of a trading snafu with the clearing firm. Meanwhile, Mr. Belesis ordered that all the firm's AWSR inventory be sold. That trade was successful.
Their status as a broker-dealer gave John Thomas and Mr. Belesis the obligation and the authority to rectify the mistake. He could have filled their orders the next day, at the expense of John Thomas, according to the Finra panel. He didn't.
As required by Finra rules, John Thomas “could, and should, have cancelled its proprietary orders and rebilled them to customers who owned freely tradeable shares of ASWR, filling the customer orders with the average price per share obtained by the firm on February 23.”
Mr. Belesis was dishonest about the trades and the firm's record-keeping, according to the Finra panel.
“Here, the facts are egregious,” the decision states of John Thomas' shoddy record-keeping for client trades of American West Resources. The firm and Mr. Belesis “concealed at least 14 tickets for customer orders to sell AWSR on February 23, 2012, as well as the electronic filing containing scanned copies of the tickets.”
“We have found that [Mr.] Belesis answered two questions untruthfully in an on-the-record investigation interview in this case,” according to the decision. “Truthful answers would have aided the investigation.”
Mr. Belesis' attorney, Ira Sorkin, said he did not want to minimize the seriousness of the Finra action but noted that the hearing panel did not find fraud or conspiracy. Out of the dozens of questions the regulator asked, Mr. Belesis didn't tell the truth in only two instances, Mr. Sorkin said. His client also traded ahead and “should have reversed the trade the next day,” the lawyer added.
Mr. Belesis became a broker in 1996, kicked around Wall Street at a few small firms with less-than-stellar reputations for the next decade and opened John Thomas in 2007. I met Mr. Belesis in September 2010, when he was flying high. With offices overlooking the
New York Stock Exchange, John Thomas was a flashy operation with a football-field-sized trading floor, and almost 200 employees and brokers.
He was a regular on cable business-news channels and seemed to particularly relish Neil Cavuto's attention on Fox Business.
Hollywood was also beckoning. Oliver Stone tapped Mr. Belesis for a walk-on part in “Wall Street: Money Never Sleeps,” the 2010 sequel to Mr. Stone's “Wall Street,” in which Michael Douglas as Gordon Gekko, uttered the famous line, “Greed, for lack of a better word, is good.”
Mr. Belesis was proud of what he had built at John Thomas, beaming with pride at his platoon of hard-charging young brokers.
“They're cold-calling, they're prospecting. They're traders,” he said of his brokers at the time. And their behavior was on the up-and-up, he claimed. “No one trades for their own account here, and we don't make any markets. We have no affiliations or any conflicts of interest with the companies we recommend.”
It seems Mr. Belesis' ardor for his employees and reps soured, particularly as the end neared for John Thomas.
Six months before the firm closed, Mr. Belesis intimidated a group of brokers who were leaving. In a dispute over their taking private client information to another firm, he disparaged brokers on their employment records, known as U5s. The harassment included brokers who did not have access to the client information, according to the Finra panel decision. John Thomas filed a criminal complaint with the police against the group. One broker, a rookie, was arrested and briefly jailed on charges he had stolen the firm's property.
Mr. Sorkin said Mr. Belesis and John Thomas did not intimidate all the brokers in the group.
When asked what was next for his client, Mr. Sorkin said he could not comment. He added that Mr. Belesis did not want
InvestmentNews to contact him directly.
Perhaps we will next see Mr. Belesis in a return to the silver screen. The way the stock market works, Oliver Stone will undoubtedly direct Wall Street 3.
