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NASD Fines, Expels Online Stock Trader Amr Elgindy and His Firm

Brokerage industry regulatory group says short seller engaged in scheme to manipulate the price of Saf T Lok.

May 20, 2003|From Reuters

A committee of the NASD on Monday expelled online stock short seller Amr "Anthony" Elgindy and his firm, Key West Securities, for engaging in what it called a scheme to manipulate the price of shares in Saf T Lok Inc.

Elgindy, who lives in San Diego, could not be reached for comment.

In 1997, Elgindy and Key West inflated the stock price of handgun safety device manufacturer Saf T Lok by entering fraudulent quotations in the Nasdaq system, according to the National Adjudicatory Council of the NASD, formerly known as the National Assn. of Securities Dealers. The stock was then sold short at the artificially high prices.

Elgindy and Key West subsequently sent out negative research on Saf T Lok, sending its shares lower, the committee said.

The committee permanently barred Elgindy from associating with any NASD member in any capacity, expelled Key West from NASD membership and fined Elgindy and Key West Securities $51,000 each.

The NASD's action comes a year after Elgindy's arrest along with two associates and two FBI agents on federal charges of racketeering and securities fraud.

The federal indictment alleges that Elgindy and the others used confidential FBI database information to manipulate shares of companies in short-selling schemes.

An investor profits from short selling by borrowing stock and immediately selling it, then repurchasing it at a lower price.

The federal case is to go to trial in January, and Elgindy has pleaded not guilty.

One of the FBI agents arrested with Elgindy has admitted to most of the accusations against him, including allegations that he dug up information about companies in regulatory or criminal trouble and passed it on to Elgindy, authorities said.

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