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Securities Panel Fines GunnAllen $750,000

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By MICHAEL SASSO

The Tampa Tribune

Published: May 10, 2008

TAMPA - A securities regulatory board slapped Tampa-based brokerage GunnAllen Financial with a $750,000 fine after finding that a company trader misappropriated customers' stock trades.

Among other findings, the Financial Industry Regulatory Authority said GunnAllen had deficient controls before 2005 to prevent insider trading and other violations within its investment banking business.
FINRA is the largest nongovernmental regulator for U.S. securities firms. The body accused former head GunnAllen trader Alexis Rivera of racking up $270,000 in improper profits in 2002 and 2003 from what it called a "trade allocation scheme." It accused him of transferring profitable stock trades into his wife's personal account rather than the accounts of GunnAllen customers.

In a prepared statement, FINRA's chief of enforcement, Susan Merrill, said GunnAllen's supervisory deficiencies enabled Rivera to carry out the scheme.

A prepared statement from Gunn- Allen notes that many of the activities alleged by FINRA had stopped by 2005. In the statement, Chief Executive Officer Richard Frueh says the company has hired additional managers and spent heavily on regulatory compliance and systems since then.

The regulatory body also suspended Rivera's then-supervisor, Kelley McMahon, from any association with any FINRA-registered firm in any principal capacity for six months.

Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.

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