Anastasios “Tommy” Belesis, who was barred Thursday from the brokerage business by the SEC on negligence charges, is still on the hot seat with Finra.
The storied chief executive of the now-defunct Wall Street brokerage John Thomas Financial Inc. continues to face an open
Financial Industry Regulatory Authority Inc. fraud complaint that he bullied brokers, lied to senior staff and intimidated colleagues in his pursuit of penny stock riches. Mr. Belesis is no longer registered as a broker with Finra.
“Finra's action is ongoing,” said spokeswoman Michelle Ong, adding that the regulator's complaint against him is unchanged by the SEC's cease-and-desist order barring Mr. Belesis from conducting securities business.
The Securities and Exchange Commission on Thursday charged the high-profile chief executive, noted for his appearances on Fox Business News and a bit part in film director Oliver Stone's sequel to the movie “Wall Street,” with negligent activity.
The SEC said that Mr. Belesis' firm placed customers in two John Thomas Financial hedge funds while the funds' adviser and manager fraudulently elevated the firm's interests over those of the funds. In addition, the SEC charged him with influencing the funds' manager and adviser, forcing them to breach their fiduciary duty.
The manager “kept an appreciative Belesis apprised of his efforts” to negotiate fees for the firm, thus depriving the funds "of a material amount of money that went instead to placement fees, loans to small companies that then used the money to pay fees to JTF and for unearned bridge loan fees JTF received for performing little or no services,” the SEC said in its order.
“For example, the manager giddily wrote to Belesis in March 2010: 'We are all going to make so much f---ing money this year, the clients of John Thomas are going to have a banner year … Write yourself a check and get ready to cash it for $45 million,'” the SEC order said.
Mr. Belesis' lawyer, Ira Sorkin, on Thursday said that his client neither admitted nor denied the SEC allegations.
“There is no reference in the order that he engaged in fraudulent conduct. The fraudulent behavior was attributed to the manager of the fund, who was not named,” Mr. Sorkin said.
The Finra complaint filed in April against John Thomas Financial alleged that Mr. Belesis bullied brokers and lied to senior staff as part of a fraudulent plan to profit from a penny stock.
Mr. Belesis routinely intimidated John Thomas Financial executives and brokers, who were expected to spend long hours cold-calling potential customers, according to the Finra complaint.
In one instance, he allegedly threatened to run over an executive and a representative in the street. In another, he is accused ot threatening to put negative information on the same executive's employment termination record, known as a Form U5.
The Finra complaint, which focuses on trades of American West Resources in February 2012, charges that John Thomas Financial and Mr. Belesis on Feb. 23 blocked at least 15 customer orders selling more than 1 million shares of the company. Meanwhile, John Thomas Financial was selling 855,000 shares in the thinly traded stock on the OTC Bulletin Board during a 600% spike in the price of its common shares.
American West Resources stock on that day opened at 28 cents a share, peaking at $1.80 a share and eventually closing the day at $1.29.
On Friday, Mr. Sorkin said: “All I can tell you is the Finra matter is still in litigation.”
Although the hedge funds' manager, George R. Jarkesy Jr., wasn't named in the SEC's settlement order on Thursday, he was named in the SEC's original administrative order of March 22.
The SEC found that Mr. Jarkesy Jr., a popular conservative radio show host in Houston, worked closely with Mr. Belesis to launch the two funds that raised $30 million from investors.
As part of the alleged scheme, Mr. Jarkesy led investors to believe that he was solely responsible for investment decisions, the SEC said.
The SEC has ordered Mr. Belesis to pay disgorgement of $311,948, prejudgment interest of $88,052 and a civil penalty of $100,000.
Further, he is now barred from associating with any broker, dealer or investment adviser and prohibited from serving as an adviser, employee, officer, director or advisory board member for any registered investment company. Mr. Belesis also is barred by the SEC from participating in any penny stock offerings.
However, he has the right to apply for re-entry into the brokerage business after one year.
Also in April, John Thomas Financial
filed termination requestswith Finra, ending its registration as a securities broker-dealer.
