NEW YORK - Securities regulators in 20 states have begun a crackdown against 14 brokerage firms accused of making unauthorized stock trades and other fraudulent sales practices.
"They're very impressive when they talk to you on the phone. Like a brother. They get you to feeling very comfortable with them," said Billy Hellums, of Roswell, N.M., who lost about $1,500 and was on the verge of investing much more.
Mr. Hellums and three other victims of allegedly abusive telemarketing practices by brokers came to Manhattan on Thursday to attend a news conference at New York Attorney General Dennis Vacco's office announcing the crackdown.
Mr. Vacco filed civil actions against the firms, charging them with highpressure calling techniques as well as outright lies; sales practice abuses in which unlicensed solicitors falsified records and conducted unauthorized trades; failing to report investor complaints and evasion of broker-dealer registration requirements.
Mr. Vacco was joined by New Jersey Attorney General Peter Verniero and Mark Griffin, president of the North American Securities Administrators Association.
NASAA, a private organization representing state securities regulators, helped lead the investigation into the fraudulent stock telemarketing that resulted in Thursday's announcement.
Brokers at Investors Associates Inc., based in Hackensack, N.J., allegedly absconded with about $60,000 belonging to Helen Sprecher, 85, of Philadelphia. The money represented 90 percent of the money saved by Mrs. Sprecher and her husband from a neighborhood grocery store they owned for 40 years.
Investors Associates' outside counsel, David Sayid, said the company had no immediate comment.
Like Mrs. Sprecher, many victims were senior citizens, Mr. Griffin said, and many complaints involved lowpriced shares of high-risk stock.
Other New York City brokerage firms named by Mr. Griffin were First United Equities, LT Lawrence & Co. and Meyers Pollack Robbins. First United president Douglas Traynor had no comment. The other two firms did not immediately return messages seeking reaction.
Mr. Hellums, a New Mexico building contractor, said he invested his money with a broker from the Uniondale, N.Y.-based Sterling Foster brokerage firm. The company did not return a phone call seeking comment.
Mr. Vacco said he had filed civil actions against First United and Investors Associates. A total of 16 states have taken action against Investors Associates, including New Jersey, which has moved to revoke the firm's registration to do business in the state.
California, Georgia and Florida are expected to announce similar actions against broker-dealer firms in the next month.