Asensio Exposed!                                                     
       Warning: may contain loud, rattling skeletons


  Asensio Makes Threat in Effort to Shut Us Down!

 NASD Boots Asensio's Brokerage  (click for details)
 Both Now Expelled from Securities Industry
Welcome to Asensio.CoN    Asensio.CoN Part Two  (7/06)                       

   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                                                                            


NASD: Unfit to Regulate
Part One

This website was created to tell the untold story of Manuel Asensio.  Among other things, it has told of the second fraud verdict against him recently upheld by a federal appeals court, his repeated NASD rule violations, the pending charges against him, and his naked shorting.  

It goes without saying that Asensio is responsible for his wrongdoing.   Yet a painful truth cannot be overlooked. It is that, in all likelihood, none of this would have happened had it not been for the negligence of the National Association of Securities Dealers (NASD).

Of course, mistakes happen. In fairness, no amount of care will prevent an occasional act of negligence in an organization of NASD's size.  The problem is that we're not talking about an isolated act.  We're talking about a pattern of incompetence, apathy, bias, and apparently, even corruption.  One that affects investors throughout the market--not just those concerned with NASD's astonishing actions in the Asensio matter.

In the Beginning

Let's start in 1989, when a Florida jury returned a verdict of $248,500 against Asensio for defrauding former brokerage client Norman Murphy.  Asensio might have lost his stockbroker license had he reported the verdict to NASD as required; he didn't.  But even when NASD learned of a major dispute between him and Murphy, Asensio was still able to prevail.  He filed a report that concealed the verdict and wildly distorted the facts.  NASD must have assumed it accurate without any fact-checking .   Had staff looked into the matter, they would have discovered the verdict--and the falsity of his claim that the case was still in litigation eight months after the jury had ruled against him.

Even though NASD has now known for years that there is not a word of truth to the story Asensio told, it still circulates his bogus report.  As of January 19, 2005, it was still giving it out--but only to those with full access to broker data, such as state regulators.  This is because the report is part of a vast stockpile of information hidden from investors.  About two-thirds of NASD's disciplinary information is off-limits to us.

Whether recipients of the report can make sense of it is a good question.  As seems to be its practice with customer complaints, NASD provides Asensio's tall tale, but withholds Murphy's side of the story. 

Getting the picture?  NASD blacks out investors' comments, conceals enormous amounts of disciplinary information from us, blindly accepts brokers' claims rather than check facts, and circulates information it knows to be false. We're expected to believe that it does these things solely to protect investors and insure market integrity.

Form BD Follies

One type of information freely available to all is the application to become a broker-dealer (Form BD).  Asensio filed his first one in 1993, when the Murphy verdict was in force and unpaid.  He nonetheless declared under oath on the application that he had no outstanding judgments or court rulings against him. 

At the time, his broker file contained a red flag--his admission that Murphy had sued him.  But NASD apparently did not invest the few minutes needed to determine the outcome of the lawsuit.  Asensio was simply granted the license.  

It was not the only time that Asensio concealed a fraud verdict from NASD. After a second fraud verdict in 2002, he continued to claim a clean legal history on Form BD.  His renamed firm, Integral Securities, has also claimed on its filings that everyone there (including Asensio) has a clean history.   But this time, NASD cannot claim it has been duped.  Documentation of the second fraud verdict has been in its office for several years and even discussed with staff.  But they have taken no disciplinary action for his false statement on another sworn filing. 

Staff didn't even update his broker files with the verdict in the interest of keeping investors informed.  We don't know whether this was due to a technicality cooked up to protect brokers or a policy of not adding anything to the file that a broker doesn't report himself.

The Snoring Cop

What concerns us most about NASD is the evidence that it is remarkably tolerant of illicit conduct.  But it appears that even its basic gatekeeper functions may leave something to be desired.  A Form BD filed by Asensio in September, 2003 is a case in point.

Asensio filed the form to amend the ownership and contact information for his brokerage.  But the information he provided accounted for ownership of less than 5% of the company.  This means that for all NASD knew, the remaining 95% or more was held by someone ineligible to own a brokerage firm.  

Owen Hernandez, who we believe to be a relative, was named as the firm's contact person, and as partial owner.   Asensio said he had the "registered principal" status that NASD requires for owners and other principals in a firm.  But according to NASD records, Hernandez had not been approved as a registered principal as of the filing date.   

Hernandez did become registered a few weeks later; granted, the delay is unlikely to have affected his ability to do his job.  But the point here is how easy it was for Asensio to claim that Hernandez had a credential that NASD records say he did not.  Just as it was no problem for Asensio to swear that he had no outstanding judgments or court verdicts against him and obtain a broker-dealer license back in 1993.  Or for his firm to file a Form BD removing him from the list of owners and officers without saying who has replaced him.  Apparently, Integral Securities has been operating without a named president, CEO, chairman, or COO--and NASD could care less.  Anyone care to guess who might filling these roles?

NASD's inattentiveness, tendency to do no fact-checking, and ho-hum attitude toward rule violations is most likely common knowledge among brokers. The question investors have to ask is how NASD's talk-tough-but-carry-no-stick routine affects the conduct of those we deal with, particularly our brokerage houses and the market makers they use.

It also serves to remember that NASD never questioned Asensio's broker-dealer license until forced to do so by an ordinary investor.  When that happened, NASD had an opportunity to make good on its claimed devotion to "tough, even-handed enforcement," "high standards of commercial honor" and "principles of integrity." Yet NASD couldn't have done a better job of proving the hollowness of its own words.  We'll take up that story--and the question of whether there is anything investors can do about NASD--in Part Two.   



NASD Officials Say the Darnedest Things (click for more)

To help me sleep through the night, we have come up with a new approach to regulatory problems that I can sum up in four words: "find fast, hit hard."

--Mary Schapiro
President, NASD Regulation

We're quite confident that the worst people in the industry are disciplined and dealt with in an aggressive way.

 --Barry Goldsmith
Executive Vice-President for Enforcement

Our default [in the Public Disclosure Program] is always towards getting investors more information . . .

--Doug Shulman
President, NASD Regulatory Services and Operations


Page created 1/25/05 ● Updated 2/02/05