Initiated By
FINRA
Allegations
SECTIONS 9(A)(1) AND 10(B) OF THE SECURITIES EXCHANGE ACT (SEA)OF 1934, SEC RULE 10B-5, NASD RULES 2110, 2120, 3310, NASD INTERPRETIVE MATERIAL-3310 - CHRISTOPHER MICHAEL HANNAN KNOWINGLY AND INTENTIONALLY ENGAGED IN TRADING ACTIVITY THAT STABILIZED OR DECREASED THE PRICE OF A STOCK TO FACILITATE A PUBLIC CUSTOMER'S BUY ORDER. HANNAN ENTERED NON-BONA FIDE SELL ORDERS THAT WERE THE LARGEST DISPLAYED IN THE STOCK THROUGHOUT THE TRADING DAY, REPRESENTING GREATER THAN THE AVERAGE DAILY VOLUME AS OF THE TRADING DAY. THESE TRADES WERE REPORTED TO THE NATIONAL SECURITIES EXCHANGE AS REQUIRED BY THE SEA. IN ADDITION TO BUY ORDERS PLACED FOR THE CUSTOMER, HANNAN ENTERED NON-BONA FIDE BUY ORDERS OF THE SAME OR SIMILAR SIZE AS THE NON-BONA FIDE SELL ORDERS. THESE NON-BONA FIDE BUY ORDERS WHOLLY OR PARTIALLY EXECUTED AGAINST THE NON-BONA FIDE SELL ORDERS. WHEN THE NON-BONA FIDE BUY ORDERS DID NOT WHOLLY EXECUTE AGAINST THE NON-BONA FIDE SELL ORDERS, HANNAN ENTERED CANCELLATIONS FOR THE REMAINING SHARES OF THE NON-BONA FIDE SELL ORDER. AS A RESULT OF THE NON-BONA FIDE SELL AND BUY ORDERS, HANNAN CREATED A FALSE APPEARANCE OF SELL SIDE ACTIVITY THAT CAUSED THE STOCK'S PRICE TO STABILIZE OR DECREASE DURING THE TRADING DAY, ALLOWING HANNAN TO ACCUMULATE SHARES THROUGH ADDITIONAL EXECUTIONS IN THE STOCK TO FILL THE CUSTOMER BUY ORDER THROUGHOUT THE TRADING DAY AT PRICES LOWER THAN WOULD HAVE BEEN AVAILABLE ABSENT THE ARTIFICIALLY CREATED DOWNWARD PRICE PRESSURE RESULTING FROM THE ENTRY OF NON-BONA FIDE ORDERS.
Resolution
Acceptance, Waiver & Consent(AWC)
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Amount
$30,000.00
Sanctions
Suspension
Registration Capacities Affected
IN ANY CAPACITY
Duration
TWO AND A HALF MONTHS (10 WEEKS)
Start Date
8/4/2008
End Date
10/12/2008
Regulator Statement
WITHOUT ADMITTING OR DENYING THE FINDINGS, HANNAN CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, HE WAS FINED $30,000 AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR TWO AND A HALF MONTHS (10 WEEKS). THE FINE IS DUE AND PAYABLE EITHER IMMEDIATELY UPON REASSOCIATION WITH A MEMBER FIRM FOLLOWING THE SUSPENSION OR PRIOR TO ANY REQUEST FOR RELIEF FROM ANY STATUTORY DISQUALIFICATION RESULTING FROM THIS OR ANY OTHER EVENT OR PROCEEDING, WHICHEVER IS EARLIER. THE SUSPENSION IN ANY CAPACITY IS IN EFFECT FROM AUGUST 4, 2008 THROUGH OCTOBER 12, 2008.
Broker Comment
THIS PAST SUMMER 2008, I AGREED TO A 10 WEEK SUSPENSION OF MY FINRA LICENSES DUE TO AN INVESTIGATION WHICH ALLEGES THAT ON AUGUST 29TH, 2005, WHILE ACTING AS A MARKET MAKER FOR FIRST ALBANY CAPITAL, I PLACED NON BONA FIDE OFFERINGS OUT IN THE MARKETPLACE AND THAT I CROSSED STOCK (CREATING WASH SALES) INTERNALLY BETWEEN 2 ECN'S (ELECTRONIC COMMUNICATIONS NETWORK). THIS INCIDENT OCCURRED DURING THE TRADING OF ONE STOCK THAT I DID NOT NORMALLY TRADE AS I WAS FILLING IN FOR A PERSON WHO WAS OUT SICK. I HAD OTHERWISE BEEN INVOLVED IN INSTITUTIONAL EQUITY TRADING FOR 12 YEARS WITHOUT INCIDENT. I BELIEVE I WAS ACTING IN A BONA FIDE MARKET MAKING CAPACITY AND I DID NOT INTEND TO CROSS STOCK. THE ERROR OCCURRED AS I WAS USING SEVERAL DIFFERENT TRADING SYSTEMS ACROSS 2 DESKS. I DID NOT PERSONALLY BENEFIT FROM THIS INCIDENT, NOR DID MY CLIENT OR MY FIRM. NO OTHER MARKET PARTICIPANTS WERE HARMED BY THIS ACTION. IN FACT, I WAS NOT AWARE THE CROSS TRADES HAD OCCURRED UNTIL 4 MONTHS AFTER THE FACT. I ARGUED MY CASE WITH FINRA FOR 2 ½ YEARS AT GREAT PERSONAL EXPENSE AND EVENTUALLY AGREED TO A SUSPENSION, NEITHER ADMITTING NOR DENYING GUILT, IN ORDER TO PUT THE SITUATION BEHIND ME.