Four Charged in $4.4 Million Stock Scheme

NEWARK (CN) – A California day trader led an inside trading scheme that made $4.4 million using information from banks and their clients, the SEC claims in court.
     Lead defendant Steven Fishoff, 58, of Westwood Village and Palm Springs, used his company Featherwood Capital after getting confidential information from investment banks, the SEC said in its 105-page complaint.
     Also charged are his brother-in-law, Steven Costantin, of Farmingdale, N.J., a former pipefitter who is listed in corporate documents as president of defendant Seaside Capital, which is a dba of Featherwood;
     Paul Petrello, 53, of Brielle, N.J. and Boca Raton, Fla., president and sole owner of defendants Brielle Properties and Oceanview Property Management;
     and Ronald Chernin, 66, a California attorney who was disbarred for misappropriating client assets, the SEC says in its June 3 lawsuit. Chernin, of Oak Park, Calif., is president of defendants Gold Coast Total Return and Cedar Lane Enterprises and an officer of defendant Data Complete.
     Federal prosecutors have filed parallel criminal charges against the men.
     “The primary component of their scheme was the systematic misappropriation of material non-public information from investment banks confidentially marketing secondary stock offerings by publicly traded issuers,” the SEC said in the complaint.
     “The confidential offering information obtained by these defendants was material because the offering shares were sold by the issuers at a discount to the market price and diluted the holdings of existing shareholders. As a result, the issuers’ stock prices dropped substantially after the offerings were announced, thus enabling the defendants who shorted the stocks to cover their short sales at a hefty profit.
     “Fishoff orchestrated the scheme.”
     They ran the game on 15 stocks by posing as “legitimate portfolio managers,” the SEC said in a statement.
     The SEC seeks disgorgement, penalties and injunctions.

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