The former head of Oppenheimer & Co. Inc.'s private client group, a former branch manager at the firm and an ex-broker have agreed to bans and a combined $175,000 fine to settle claims tied to illegal unregistered sales of billions of shares of penny stocks on behalf of a customer, according to a settlement released Thursday by the Securities and Exchange Commission.
The SEC said the former Oppenheimer executive, Robert Okin, and a branch manager in the firm's Boca Raton, Fla., office Arthur Lewis, failed to properly supervise the broker, Scott Eisler, and ignored red flags as the broker traded some 2.5 billion penny stock shares in illegal unregistered transactions. In some cases, Mr. Lewis participated in or approved the sales, the SEC said. The sales generated some $12 million in proceeds and $588,400 in commissions for Oppenheimer, according to the settlement.
RED FLAGS
“In the face of red flags that their customer's stock sales were not exempt from registration, Oppenheimer's branch personnel allowed these unregistered transactions to occur,” said Andrew J. Ceresney, director of the SEC's Division of Enforcement. “Okin, one of Oppenheimer's senior-most executives, also failed to properly supervise by allowing these transactions to occur and failing to respond appropriately to the red flags suggesting violations of the federal securities laws.”
Mr. Okin
agreed to pay $125,000 and to be barred from working in the industry in any supervisory capacity for at least one year. Mr. Okin resigned from Oppenheimer in December to pursue other interests,
according to a report from Reuters.
He has not re-registered with another firm since, according to his
BrokerCheck report.
Mr. Okin was a top executive at Oppenheimer and had $1.14 million in total compensation in 2013, according to Oppenheimer Holdings' proxy statement.
Mr. Lewis, who is currently with Aegis Capital Corp. where he is a managing director, according to his LinkedIn profile, agreed to pay $50,000 and is barred from working in a supervisory capacity in the securities industry for at least one year.
Mr. Eisler, who is now an adviser at Moors & Cabot Inc.,
will also pay $50,000 and is barred from engaging in any penny stock sales or working in the securities industry for at least one year.
None of the three admitted to the SEC's allegations as part of the settlement with the agency in the administrative proceeding. Mr. Okin could not be immediately reached for comment. Mr. Lewis and Mr. Eisler did not immediately respond to calls requesting comment.
VIOLATIONS DENIED
Mr. Okin and Mr. Lewis denied any violation of securities laws when reporting the initial investigation on their BrokerCheck records.
Some of the actions in this settlement were tied to an earlier settlement that Oppenheimer struck in January when it
paid $20 million and admitted to allegations from the SEC and the Financial Crimes Enforcement Network of improper penny stock sales.
Oppenheimer had no comment on the settlement, according to a spokesman for the firm, Dmitriy Ioselevich.
The firm had 1,324 financial advisers in 92 offices, according to its
most recent annual report 2014. Its assets under management were approximately $87.3 billion.
