Boots Asensio's Brokerage
(click for details)
Unfit to Regulate
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
violations, the pending charges against him, and his
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
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
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
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.
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.
We're quite confident that the worst people in the industry are disciplined and dealt with in an aggressive way.
default [in the Public Disclosure Program] is always towards getting investors
more information . . .
Page created 1/25/05 ● Updated 2/02/05