Fraudulent Trading
The Financial Industry Regulatory Authority (FINRA) has expelled New York brokerage firm John Thomas Financial and barred John Thomas’s Chief Executive Officer, Anastasios “Tommy” Belesis, from the securities industry for their conduct relating to the sale of America West Resources, Inc. (AWSR) common stock, including trading ahead of customers’s orders, violating just and equitable principles of trade, and for providing false testimony. FINRA also ordered John Thomas and Belesis to pay more than $1 million in restitution to customers. FINRA’s barring of Belesis comes on the heels of the SEC barring Belesis in 2013 for separate issues involving an outside hedge fund manager allegedly placing John Thomas’ interests before those of its clients. This type of trading ahead of their customers acknowledgements to secure their own interest is a form of Fraudulent Trading.
On Feb. 23, 2012, AWSR’s stock price spiked approximately 600 percent. That same day, John Thomas sold 855,000 shares, the majority of its proprietary position in AWSR, receiving more than $1 million in proceeds. FINRA found that John Thomas and Belesis traded ahead of 14 customers who tried to sell their own AWSR shares, and had profited while customers who had tried to sell AWSR stock had been unable to do so. John Thomas apparently had tried to sell shares for customers, but the sales did not go through because of a clearing firm problem. FINRA nevertheless determined that John Thomas “could, and should, have cancelled its proprietary orders and rebilled them to customers . . .” Again, another form of Fraudulent Trading that was discovered.
