In the Matter of the Application of Kirlin Securities, Inc. Anthony Kirincic and Andrew Israel

Anthony Kirincic (defendant) cofounded broker-dealer Kirlin Securities, Inc. (Kirlin) (defendant). Head equity trader Andrew Israel (defendant) received and reviewed trading orders. Kirlin’s parent company, Kirlin Holding Corporation (KILN), was listed on Nasdaq’s National Market. About 80 percent of KILN’s stock was held in Kirlin-serviced accounts. Kirincic owned 20 percent. After KILN reported losses for two years, its stock’s closing bid price dropped below $1, the minimum price for being listed on Nasdaq, and remained there for 30 trading days. Nasdaq notified KILN that its stock would be delisted unless its bid price closed at or above $1 for at least 10 consecutive trading days within the next 90 calendar days. After receiving the delisting notice, Kirincic placed several orders for KILN stock for his parents. The stock price continued to decline. Between March 18 and April 22 (the trading period), Kirincic placed large KILN orders for his divorced and unemployed sister who had not actively purchased KILN stock for four years. Kirincic set new inside bid prices by entering orders on the electronic communications network Brut ECN, received partial fills, and canceled and re-entered orders at higher prices. Kirincic’s sister claimed she was acquiring stock as a legacy for her children but sold her shares at the end of 2002. KILN’s price rose from $0.68 to $1.15 and declined after the trading period. Kirincic’s family’s transactions accounted for 79 percent of the trading. The Financial Industry Regulatory Authority (FINRA) (plaintiff) brought disciplinary charges and found that Kirlin, Kirincic, and Israel unlawfully manipulated KILN’s price to avoid delisting. FINRA expelled Kirlin from membership and barred Kirincic and Israel from the securities industry. Kirlin, Kirincic, and Israel sought Securities and Exchange Commission review.