Securities and Exchange Commission v. Margolin

Fed. Sec. L. Rep. (CCH) 97,025 (1992)

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Securities and Exchange Commission v. Margolin

United States District Court for the Southern District of New York
Fed. Sec. L. Rep. (CCH) 97,025 (1992)

  • Written by Sharon Feldman, JD

Facts

The Securities and Exchange Commission (SEC) (plaintiff) brought an action against Ronald Margolin and others for having engaged in freeriding in violation of federal securities laws. The SEC alleged that Margolin placed trades for over $35 million worth of securities but refused to pay for unprofitable trades. Margolin concealed from nine brokerage firms the plan to use the trade proceeds to finance the trades and failed to reimburse the brokerage firms for trading losses. By ordering a broker to sell securities Margolin and the others did not own and forcing brokers to cover unsettled sales, Margolin caused brokers to violate Regulation T. Margolin received transaction-based compensation, advertised for clients, and possessed client funds and securities. The SEC alleged that Margolin acted as an unregistered broker in violation of § 15(a)(1) of the Securities Exchange Act of 1934 (SEA) and moved to preliminarily enjoin Margolin from further violations.

Rule of Law

Issue

Holding and Reasoning (Leisure, J.)

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