ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, today announced the guilty plea of FRANK J. FURINO, a former New York Stock Exchange ("NYSE") floor clerk employed by Lawrence Helfant, LLC ("Helfant"), to an indictment charging him with conspiring to engage in a "front-running" securities fraud scheme that generated over $300,000 in illegal trading profits between August 2000 and December 2001. The guilty plea was accepted this afternoon by United States Magistrate Judge Roanne L. Mann, at the U.S. Courthouse in Brooklyn, New York. The case is assigned to United States District Judge Sterling Johnson, Jr.

The investigation resulting in FURINO's guilty plea was conducted by the United States Postal Inspection Service and supervised by the United States Attorney's Office, with assistance provided by the United States Securities and Exchange Commission and the New York Stock Exchange Regulation. The SEC and NYSE Regulation previously filed civil and administrative charges against FURINO in connection with this case.

FURINO was routinely entrusted with material, non-public information concerning large orders to purchase or sell securities that had been placed by Helfant's institutional customers, and was responsible for, among other things, relaying these orders to Helfant's floor brokers for execution on the NYSE trading floor.¹ FURINO breached a duty of confidentiality that he owed to Helfant and its customers by selling the non-public customer order information to a stock trader, identified in the indictment as an unindicted co-conspirator.

The stock trader used the information he received from FURINO to profit at the expense of Helfant's customers by "front-running," or "trading ahead" of, the customers' orders. Specifically, FURINO would inform the stock trader about large customer orders to purchase or sell particular securities before the orders were executed by Helfant. The orders were typically large enough that their execution would be likely to affect the prices of the securities in question in a predictable manner. The stock trader then purchased the same securities before the customers' orders were executed, in anticipation of the movement in price that the customers' larger trades were likely to cause. FURINO also regularly delayed the execution of Helfant customer orders so that the stock trader would have sufficient time to "front-run" those orders. The scheme harmed the Helfant customers because it allowed the stock trader to purchase the securities at favorable prices, which were no longer available to the customers by the time their orders were executed. In exchange for his participation in the scheme, FURINO received thousands of dollars in secret cash bribe payments from the stock trader.

In pleading guilty today, FURINO admitted that he provided the stock trader with non-public, confidential information and that he was aware that the stock trader would illegally use the information to "trade ahead" of customer orders for his own profit. FURINO also admitted that he accepted cash bribes from the stock trader in exchange for the information.

"FURINO's fraudulent 'front-running' scheme allowed him to line his own pockets at the expense of his firm's clients," stated United States Attorney MAUSKOPF. "Today's guilty plea demonstrates our commitment to bringing to justice Wall Street professionals who exploit their clients for personal gain." Ms. MAUSKOPF thanked the Postal Inspection Service, the SEC, and NYSE Regulation for their assistance.

When sentenced by Judge Johnson, FURINO faces a maximum sentence of five years' imprisonment, three years' supervised release, and a $250,000 fine.

The government's case is being prosecuted by Assistant United States Attorneys Michael A. Asaro and Sean Casey.

The Defendant:

ame: FRANK J. FURINO
Address: Port Washington, New York
DOB: 3/23/56

 

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¹ At the time when the scheme is alleged to have taken place, Helfant was reportedly the largest independent floor brokerage firm on the NYSE. In the fall of 2001, Helfant was acquired by Jefferies Group, Inc., an international investment bank headquartered in Manhattan. Helfant subsequently changed its name to Jefferies Execution Services, Inc., and became the NYSE brokerage affiliate of Jefferies Group, Inc. Neither Helfant, Jefferies Execution Services, Inc. nor Jeffries Group, Inc. was charged in the indictment.

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