His NASD Record

In December 2000, the National Association of Securities Dealers (NASD) announced disciplinary action against Asensio for a long list of violations [480 KB].  Among them were misleading performance claims, anonymous Internet postings, and disregard of short-sale rules.  Asensio was censured, fined $75,000, and required to pass the NASD exam again.

At the time, Asensio was no stranger to disciplinary action.  Although not disclosed in NASD's news release, the $75,000 fine was not his first.  It was his fifth. 

His previous violations were: 

A $2,000 fine the same year (2000) for 24 violations of the requirement that orders be accepted or declined within 20 minutes.

• A $2,500 fine levied in 1998 for failing to maintain required staff training and continuing education programs for 1996 and 1997.
   

• A $1,000 fine and censure in 1997 for failing to file papers with the Municipal Securities Rulemaking Board about a deal he had negotiated.  

• A $7,500 and censure in 1994 for violating NASD by-laws and rules of fair practice. The violations were "effecting more than 10 principal trades as a $5,000 broker dealer" and "participating as selling group member in two municipal securities underwritings in violation of restriction letter." 
  
  After his latest censure, Asensio submitted an action plan to assure NASD that the violations would not be repeated.  He also agreed that he would not subsequently deny the disciplinary action or portray the charges as lacking merit. 

How well has he kept his promises? 
 

• Within a few months, he asserted in a sworn affidavit [480 KB] that he had never been  accused of "an illegal act" by industry regulators.  
   

• By the fall of 2001, his firm began posting anonymously again on message boards, first under the alias dgandll and then under bigbull712001.
   

• In a March 2002 deposition [1.9 MB], Asensio described the investigation against him as "fraudulently induced." 

• In July 2003, he told a reporter for the Bloomberg news service, "We paid them the same way you would pay a hit man who comes to your door."
   

• Early in 2003,  Asensio put up a new website that once again distorted his performance.  He even repeated one of the key advertising violations to the letter: falsely raising the price at which he had made a shorting recommendation to inflate his track record.
   

But, it was in a television interview in July 2002 that he really outdid himself--with the following exchange that was broadcast worldwide via CNBC:
 

Liz Claman. You've said that there needs to be short selling reform and that short sellers need to get a bit more respect and, in certain ways, as we put those ideas of yours up on the screen, (freedom of short seller speech, eliminating trading restrictions on the shorts, granting of protection by anti-fraud laws), I've got to ask you, you've got your own sanctions against you, particularly by the NASD, saying that you had problems with trade reporting, internet advertising violations, and other issues, how do you make the two meet when you've got violations against you from the NASD?

Manuel Asensio. Well, the violations against us we hold as a badge of courage. We did nothing wrong. Our record is extraordinary. We came out and said these 28 companies were frauds. Now, we've sold short many, many companies. There was nothing wrong with our accounting. There was nothing wrong with our trading. Our record of uncovering fraud is unmatched on Wall Street and we've even probably discovered more frauds that the SEC, the New York Stock Exchange, and the American Stock Exchange combined in the six years that we have been working. The fact that the regulators saw fit to go after the one member of the NASD that was involved in issuing public reports about companies engaged in fraud speaks for itself.

And that's what needs to be reformed. I think Americans are well aware that Dick Grasso is not a white-lily reformer. That Dick Grasso is merely a front man for the mob that stole America's savings and created this recession. And I'm not Dick Grasso; I'm a short seller. I'm here to make money. And I should be allowed to ply my trade. And Congressmen and Senators should become aware of, and the American public should speak to Congressmen and Senators and tell them that it's about time that we have a balanced fair playing-field and allow short sellers, the only people that really care about savings, and care about having prices that are reasonable, compete with the stock promoters like the Dick Grassos and Harvey Pitts of the world.

As of this writing, NASD has taken no further action against him.

Page Created 11/30/02  • Updated 04/02/04  •  Updated 02/22/05