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Josephtal & Co. Brokerage Charged with Fraud
The NASD has charged the brokerage firm and three of its executives with fraud and unfair business practices in the sale of a stock to investors.
The stocks in question is Victormaxx Technologies, which Josephtal underwrote in the initial public offering and was the major market maker thereafter.
The NASD alleges that Josephtal had built up an inventory of the stock, was suffering losses of about $3 to $4 million, and attempted to pass those losses on to unsuspecting investors. It did so through high pressure sales tactics and paying the brokers commissions of about 29% of an investor's purchase (NASD guidelines require a good reason to charge more than even 5%).
Victormaxx since has been delisted from the NASDAQ small cap market, with its recent price ranging from 1 cent to 3.75 cents.
Source: Wall Street Journal, January 21, 2000
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