According to a press release, Janney has been fined $1.2 million for permitting improper market timing and related violations. NASD has also ordered the firm to pay almost $1 million in restitution to the affected funds.
Kenneth Rosato, former branch manager of Janney’s Brooklyn office and the broker found responsible for the misconduct, has been suspended for one year by NASD and fined $370,000. According to the announcement, $185,000 of the fine represents commissions he received as a result of the improper activities. NASD also barred Rosato’s sister-in-law who was former branch operations manager at the Brooklyn office, for refusing to testify in the investigation.
Other than the market timing activities, NASD found other violations such as failure to establish an adequate supervisory system for detection and prevention of late trading and failure to create records reflecting the time of receipt of mutual fund orders.
Janney and the Rosatos neither admitted to nor denied the allegations, but consented to the entry of the findings.
In another press release, NASD announced that it has fined First Allied Securities, Inc. of San Diego $408,000 for facilitating improper market timing actions by three of its hedge fund customers.
In addition, Gary Ferraro, a former First Allied salesman from Chicago and broker for the three customers, was suspended by NASD for nine months and fined $136,700.
First Allied and Ferraro also neither admitted to nor denied the allegations, but consented to the entry of the findings.