Asensiogate Part II—NASD's Sordid Saga Continues
Note: Instead of our customary style, we'll be presenting part II as a
series of individual entries—similar to a blog. This will allow us to post
each section of the story as it is completed, so you won't have to wait for more
details until every aspect of the story has been written up. Please check back
regularly for updates.
Hear No Evil
We say the panel and the Membership Committee have some 'splainin to do. They can start by telling us why NASD's own database listed Alta Mar as owner of Integral in April 2004 if the Membership Committee said no to the idea in February 2004. They can tell us why, if the Committee said "no way," Alta Mar was still listed as owner of Integral on the Form BD filed in December 2004. That filing was actually in effect on the day of the hearing panel's report (January 5, 2005). They can also explain why NASD accepted Form BD filings from Integral that listed Alta Mar as owner for a full 19 months if the Committee denied the transfer request. By our reading of the rules, the Committee had 45 days to say no from the time that Integral submitted its February 2004 request to transfer ownership. We don't see evidence of a no answer in that time frame; we see evidence of a yes answer.
mentioned in Part 1, Asensio is almost certain to appeal
NASD's meaningless "bar" against him to the SEC,
and then to a federal appeals court. The panel report,
and the one that follows from NASD's National Adjudicatory Council,
will play central roles in any appeal. You'd think NASD would feel an
obligation to insure that the report is accurate and that no one uses
it to cover up shenanigans that District 10 officials
devised to let Asensio to stay in the industry when they were
required by law to
more we learn about the bizarre love affair between NASD and Manuel Asensio,
the more we find that lying seems to be accepted operating procedure.
There's just one problem. It's not true. The "bar" did not take effect on February 20, 2005. Nor did the hearing panel specify a date when it would take effect. It is now only two weeks before February 20, 2006. NASD still has not said a word about Asensio's appeal, and there is no predicting when it will. In the meantime, NASD officials have made a mockery of what was said to the SEC by putting ownership of Integral Securities in Asensio's name despite the supposed "bar."
Our reader emailed Barry Goldsmith, NASD Executive Vice-President for Enforcement, and asked him to resolve the conflicting information provided by McGuire and other sources. Goldsmith* acknowledged the email but did not answer.
What to make of this? Looks like someone at NASD lied to the SEC, conveying a message that NASD had put an end to Asensio's involvement in the securities industry when this was not so. The question is who.
Prediction: the last thing on NASD's to-do list will be finding out who misled the SEC. Mark our words.
Goldsmith will leave NASD next month to become a
partner at the Washington, D.C. office of the Gibson, Dunn and Crutcher law
Duping Eliot Spitzer
When we launched this site, we never imagined we'd be writing about NASD giving false information to the SEC. Or about how NASD refused to cooperate with Eliot Spitzer's office and duped his staff.
As previously reported, District 10 convinced Spitzer's office
that Asensio left the industry on September 11, 2003 due to "action by
the NASD." Spitzer's staff felt his license fraud
was therefore moot and declined to pursue it further. But we
believed the staff had been duped. Oddly enough, the hearing panel report
provides support for both positions.
Of course, the claim is false. The September
2003 filing did not show that Asensio ended his association with
the brokerage. It merely reported the transfer of a tiny share of it (<5%)
to Hernandez, his cousin. Asensio kept the rest but
tried to conceal this by not mentioning his ownership on the form.
This clever but dishonest tactic should have been evident to the panel.
He also took back the 5% transferred to Hernandez only a few weeks later, but
the panel acts as though this never happened.
A footnote provides Asensio's actual words. He
said he did not allow his cousin to open new accounts or answer client questions
because Hernandez would "only embarrass himself and the firm" if he tried to advise
Now that we know what Asensio admitted to the
hearing panel, it's more obvious than ever that NASD's District 10 duped Spitzer's staff
2004. Asensio never left the brokerage. District 10
claimed that he had to create the appearance that the
license fraud complaint had been
addressed. By preventing Spitzer's office from pursuing it further,
District 10 denied the
investing public the opportunity to have a real regulator, as
opposed to an imposter like NASD, get to the bottom of this issue.