Midtown Partners Stockbroker Charged In Massive Penny Stock Fraud
Kevin Patrick Gillespie of New York New York a stockbroker employed by Midtown Partners has been charged in a Complaint by Securities and Exchange Commission (SEC) who alleged that Gillespie and others committed fraud through their involvement in a pump and dump penny stock scheme which generated more than $10,000,000.00 in illegal proceeds. SEC Regulatory Action No. 3:18-cv-01530 (July 6, 2018).
According to the Complaint, a pump and dump scheme was engineered by Gillespie in 2017 when he was the Chief Executive Officer of Arias Intel Corp. (ASNT). SEC alleged that Gillespie paid an ASNT advisor 200,000 shares of ASNT stock for consulting. These shares were allegedly sold at a substantial premium to Andrew Hackett who was a purported lender to ASNT.
The Complaint alleged that Gillespie arranged for a phony $300,000.00 convertible note to be issued by ASNT which would allow Hackett to convert the debt into 750,000 shares. The three individuals subsequently made arrangements for 950,000 in shares to be sold through the pump and dump scheme. The Complaint alleged that Gillespie’s conduct was violative of Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5.
Financial Industry Regulatory Authority (FINRA) Public Disclosure indicates that Gillespie is the subject of two customer initiated investment related disputes pertaining to allegations of his bad business practices during the period in which the stockbroker was employed by GunnAllen Financial Inc.
A customer initiated investment related complaint pertaining to Gillespie’s conduct has been settled for $75,000.00 in damages supported by allegations that the customer was not sufficiently advised about over the counter equities transactions effected on margin in the customer’s account.
Another customer initiated investment related arbitration claim in reference to Gillespie’s conduct has been resolved for $50,000.00 in damages. According to the claim, misrepresentations were made to the customer and securities transactions lacked appropriate supervision from the securities broker dealer. The claim also alleges that the customer’s account had been churned and that unauthorized common or preferred stock trades were effected in the customer’s account resulting in unwarranted losses.
Gillespie was terminated by Midtown Partners on July 13, 2018 founded on accusations that he had become the subject of an enforcement action or civil action brought by Securities and Exchange Commission (SEC) alleging that he engaged in fraud.