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   12/28/07  Revised & Updated Asensio FAQ
  03/18/06  The Elgindy Files (new items 2/07/06; 3/19/06; 3/22/06; 07/14/06; 12/18/07)                              
 05/05/04  Appeals Court Upholds Fraud Verdict Against Asensio
   04/04/04  Asensio Charged Again
 01/11/04  Bill Wexler Update
12/24/03  How Asensio Duped Regulators                                                                            

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NASD Plot Thickens
Is NASD Corrupt?
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How He Duped NASD
1989 Fraud Verdict
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How Asensio Duped Regulators

Asensio has proven himself to be no ordinary investment banker. From 1989 to 1993, he managed to hold on to his registration as a stockbroker, without restriction, despite a quarter-million dollar jury verdict against him for defrauding a client.  Then, in 1993, he pulled off an even more amazing feat.  With the verdict still in force and apparently unpaid, he convinced the NASD, SEC and New York Attorney General to grant him broker-dealer status. 

How did he do it?  Here, at last, is the story.  

In the Beginning

On October 15, 1987, while working as senior vice-president at the Florida brokerage of Steinberg & Lyman, Asensio was contacted by Norman Murphy. Murphy wanted to sell some stock warrants.  Asensio agreed to seek a buyer for him, and the next day, called to report that he had found one.  Asensio agreed, in writing, to pay Murphy $4.50 per warrant.   All Murphy had to do was deliver his 20,000 warrants,  and Asensio would complete the sale.   

Murphy did so a few days later.  But Asensio did not deliver his securities to the buyer as promised, nor the $90,000 in proceeds (minus commission) that Murphy was expecting.   Instead, Asensio bought the same warrants more cheaply in the open market and filled the buyer's order with those.  Why?  Just look at the dates.  Asensio made his deal with Murphy one business day before Black Monday. Once the market crashed, he was no doubt able to pick up the same securities in the open market for considerably less than he had agreed to pay Murphy for them.   By selling those securities to Murphy's buyer instead, a larger profit was made.  Murphy, however, was left without a buyer and with securities that had declined in value due to the crash.

Murphy decided to sue--and also file a complaint with NASD. But by the time Murphy's lawsuit was ready, Asensio had moved to New York.  Although he admits knowing about the case, Asensio did not show up for the trial.   As a result, he was not present to hear the jury return a verdict against him of almost a quarter million dollars in compensatory and punitive damages.

The Cover-Up Begins

The court notified Asensio by mail of the jury's decision.  In sworn testimony given in 1998, Asensio denied receiving the notice. Yet, court records show it was not returned as undeliverable.  Asensio also claimed that he first saw the verdict seven years after the trial, in 1996.  However, he allowed that he must have had "some knowledge" of the one-paragraph verdict prior to that.  

His testimony is refuted by court documents.  The court docket lists several unsuccessful motions by him in 1990 and 1991 to overturn the verdict.  One motion states plainly that Asensio hired a lawyer in November 1989 to seek relief from the verdict.  The filing of these motions makes clear that Asensio knew of the verdict not long after it occurred.  

NASD members have an obligation to report changes in their disciplinary history, such as new court verdicts, to the association.  But there is no evidence that Asensio breathed a word to NASD about the Murphy verdict--when he learned of it in 1989 or at any time thereafter.  Leaving regulators in the dark appears to have been the key to keeping his stockbroker license and to moving up to broker-dealer status a few years later.

The Duping of NASD

Asensio's disciplinary file at the NASD does contain a brief summary of the Murphy dispute.  It is the result of a complaint Murphy filed with the agency independent of the lawsuit.  Asensio was asked to fill out a standard reporting form, known as Form U-4, about the dispute.  He did so, filing his answers with the agency on December 4, 1989.   And what a story he told!

According to Asensio's filing, the dispute was "in litigation" as of that time.  But it wasn't.  The case had been tried by a jury eight months earlier.  It had ruled against him to the tune of a quarter million dollars--and Asensio knew it.  After all, only a few weeks earlier, he had hired an attorney to seek a reversal of the verdict against him.

But his filing made no mention of the trial or the verdict. Instead, it boldly asserted that Murphy "did not have any cause whatsoever for claim."  Nor did Asensio limit himself to self-righteous opining.   Recall that the dispute was about his failure to honor a contractual agreement to deliver Murphy's securities to a buyer.  In his filing with NASD, Asensio twisted the facts to put the failure to deliver on Murphy rather than himself! 

The client failed to deliver securities that he sold during the crash of October 19, 1987.  We had sold the securities in a new account with no equity based on his promise to send the securities via Federal Express the day after the sale.  He did not send them.  The firm I then worked for bought him in.

For its part, NASD seemed more than willing to accept Asensio's version of the story and to be generous with him. It never followed up to see what became of the supposed "litigation."  It also made the dispute "non-reportable."  This means that the report was relegated to a special disciplinary database off-limits to the public.  Not that regulators and potential employers who could use the database found anything damning.   With no factual information about the dispute or the verdict, it's little wonder that Asensio was able to get job after job on Wall Street before starting his own firm.  

The Feds, Too?

Why Asensio made several efforts to overturn the Murphy verdict in 1990 and 1991, only to abandon them, isn't clear.  By 1993, however, it's obvious that he wanted to start his own business.  To do so, he needed to complete Form BD, the application to become a broker-dealer. 

On October 29, 1993, Asensio presented himself to a notary public with Form BD in hand.  Despite the verdict in the Murphy case,  his answers on the sworn document assured a federal agency (the SEC) and the NASD that he had never been found by a court to have violated investment-related statutes or regulations. 



The application also asked if he had any unsatisfied judgments.  Asensio answered no to that question also.  But it's difficult to see how this could be true. Because four years later, Asensio asked the court in Florida for an emergency stay to prevent execution of Murphy's judgment against him.  Obviously, if the judgment was still unpaid in 1997, it must had been unpaid in 1993.

The SEC and NASD, however, took Asensio at his word that his record was clean.  They issued a broker-dealer license to him.  So did the state of New York. 


The day did come when Asensio was able to free himself of the Murphy judgment.  More than nine years after the jury ruled against him, Asensio was able to have the verdict set aside on grounds that the process server who handed him the lawsuit had not been properly licensed.  However, keep in mind that this did not happen until late in 1998.  It has no bearing on whether he improperly withheld information from regulators before then, or on whether he told the truth when he applied for his broker-dealer license in 1993.  

Put another way, the question here is whether Asensio's statements were true at the time he made them.  And if they weren't?  Then the question is what regulators who assure us they are getting tough on Wall Street wrongdoing intend to do about it.


Update 5/12/04

We recently learned that while this story was being written, NASD was doing something about the deception Asensio engaged in on his license application.  But that something was the opposite of getting tough.  For the astonishing story, one that confirms our worst fears about the NASD, see Is NASD Corrupt? (two parts).


For Reference: Legitimate License?, an older page of the site, provides a chronology of how Asensio became registered and licensed as a broker.


Page Created 12/24/03 Updated 2/15/04 Updated 5/12/04