Ex-Annapolis stockbroker barred, fined $35,000 supervisors suspended

January 21, 1992|By Ross Hetrick

A former Annapolis stockbroker, who worked for a now-bankrupt brokerage firm, has been barred from the practice and fined $35,000 by the National Association of Securities Dealers Inc., a self-policing group for the over-the-counter market.

The NASD also suspended two of his former supervisors for three and five days for failing to prevent the violations. The three suspensions become effective today.

The violations allegedly occurred between Oct. 26, 1987, and May 15, 1988, when Stephen Clay was a broker in the Annapolis office of Blinder, Robinson & Co. He was charged with recommending that two unidentified investors, a husband and a wife, invest in low-priced, speculative stocks, known as penny stocks.

"Clay knew or should have known such securities were not suitable for the customers," the NASD decision said.

Mr. Clay, who has moved out of the state, could not be located for comment.

The NASD also charged Mr. Clay with making excess transactions in the accounts, known as churning, which generated commissions to himself of 33 percent of an initial cash investment of $14,368 and 37 percent of a $18,129 investment.

The branch managers during this time, John D. Bowsman and James E. Whittenberg Jr., were found by the NASD not to have properly supervised Mr. Clay's activities. The two men submitted a settlement with the NASD under which Mr. Bowsman was suspended from acting as a supervisor for five days and Mr. Whittenberg was suspended as a supervisor for three days.

Efforts to reach the two men, who have moved away from the Annapolis area, were unsuccessful.

Since the alleged violations occurred, the Annapolis office of Blinder, Robinson & Co. has closed. The Denver-based brokerage firm filed for Chapter 11 bankruptcy in July 1990.

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