Hudson Valley Capital Management was expelled from the securities industry and its top executive barred for life for fraudulently allocating trading losses to customers, the Financial Industry Regulatory Authority said.
Chief Executive Officer Mark Gillis defrauded clients this year by covering up losses and sticking stock in customer accounts at inflated prices, the Wall Street-funded regulator said today in a statement. One lost about $400,000, Finra said.
Gillis, 42, shared ownership of the Croton-on-Hudson, New York-based brokerage with Charles Doller, who wasn’t banned or suspended, according to Finra. Doller told Finra that he notified regulators and clients as soon as he learned about the fraudulent trades, according to regulatory records.
“FINRA fully investigated Mr. Gillis and Hudson Valley Capital Management within weeks of Gillis perpetrating his fraudulent scheme and obtained evidence that led to the disciplinary action announced today,” Cameron Funkhouser, executive vice president of FINRA’s fraud-detection unit, said in the statement.
Messages left at numbers listed for Gillis and Doller weren’t immediately returned. Gillis moved last year to Saranac Lake, New York, where he’s planning to open a microbrewery, the Adirondack Daily Enterprise reported in August.
Gillis lied to customers who complained about unauthorized trading in February and July, Finra said. The fraud began to unravel in August, when Gillis reported to Finra that his brokerage was short of capital due to trading errors, the regulator said.
A month later, Gillis told Finra investigators interviewing him that he hadn’t manipulated the stock prices or defrauded customers. Gillis confessed in a second interview two weeks later.
Hudson Valley Capital said in a January filing with the U.S. Securities and Exchange Commission that it lost $108,462 last year on a “trading error.” The firm’s total loss for the year was $8,207 on revenue of $526,167, the filing shows. The company was called Securities Trading Inc. until the end of 2009, when it was sold, according to another SEC filing.
Hudson Valley Capital had no representatives other than Gillis and Doller, Finra said.
To contact the reporter on this story: Zeke Faux in New York at firstname.lastname@example.org
To contact the editor responsible for this story: David Scheer at email@example.com