FINRA Bars Broker for Insider Trading in Japanese Securities
WASHINGTON -- July 2, 2014
The Financial Industry Regulatory Authority (FINRA) announced today that it
has barred Kenneth Ronald Allen, a former equity trader at First New York
Securities L.L.C., from the securities industry for trading Japanese
securities on the basis of material, non-publicized information that he
received from a corporate insider.
Cameron K. Funkhouser, Executive Vice President of FINRA’s Office of Fraud
Detection and Market Intelligence, said, "Individuals who are registered with
FINRA are expected to observe high ethical standards and conduct themselves in
accordance with just and equitable principles of trade regardless of where
securities are listed.”
FINRA’s investigation found that in September 2010, Allen placed orders using
a firm proprietary trading account from New York City to short sell shares of
Tokyo Electric Power Company Inc. (TEPCO), which is listed on the Tokyo Stock
Exchange. Allen created a short position in TEPCO shares while he was in
possession of material, non-publicized information that TEPCO was close to
announcing a secondary public offering of its securities. Allen obtained the
material, non-publicized information from a consultant whose source was a
Tokyo-based employee of Nomura Securities Co. Ltd., a large Japanese
broker-dealer, which underwrote the TEPCO offering.
After receiving the inside information, Allen traded in TEPCO shares between
September 15, 2010, and September 28, 2010. TEPCO publicly announced the
secondary offering on September 29, 2010, and the market price for its shares
declined. Allen covered the short position after the announcement, realizing a
profit of approximately $206,000.
FINRA found that Allen’s conduct violated FINRA Rules to observe high
standards of commercial honor and just and equitable principles of trade.
In settling this matter, Allen neither admitted nor denied the charges, but
consented to the entry of FINRA’s findings.
FINRA's investigation was jointly conducted by the Office of Fraud Detection
and Market Intelligence and the Department of Enforcement.
Investors can obtain more information about, and the disciplinary record of,
any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck.
FINRA makes BrokerCheck available at no charge. In 2013, members of the public
used this service to conduct 16.5 million reviews of broker or firm records.
Investors can access BrokerCheck at www.finra.org/brokercheck or by calling
(800) 289-9999. Investors may find copies of this disciplinary action as well
as other disciplinary documents in FINRA's Disciplinary Actions Online
FINRA, the Financial Industry Regulatory Authority, is the largest independent
regulator for all securities firms doing business in the United States. FINRA
is dedicated to investor protection and market integrity through effective and
efficient regulation and complementary compliance and technology-based
services. FINRA touches virtually every aspect of the securities business –
from registering and educating all industry participants to examining
securities firms, writing rules, enforcing those rules and the federal
securities laws, informing and educating the investing public, providing trade
reporting and other industry utilities, and administering the largest dispute
resolution forum for investors and firms. For more information, please visit
Financial Industry Regulatory Authority (FINRA)
Michelle Ong, 202-728-8464
Nancy Condon, 202-728-8379
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