The Securities and Exchange Commission today announced charges against a stock trader, Adam Rentzer, for illegally paying undisclosed cash kickbacks to his broker in exchange for receiving preferential access to lucrative IPOs, allowing Rentzer to reap greater profits in secondary market trading.
The SEC alleges that Rentzer and his broker, Brian Hirsch, had a long-running arrangement that circumvented allocation policies and procedures at two major brokerage firms, where Hirsch worked on the wealth syndicate desk, so as to give Rentzer larger allocations of coveted public offerings being marketed by the firms than he would otherwise have received. In most instances, Rentzer sold his stock into the market as soon as possible to turn a substantial profit and secretly shared those profits with Hirsch under their fraudulent arrangement, paying Hirsch his share in cash.
The SEC’s complaint, which was filed in federal court in New Jersey, charges Rentzer with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The U.S. Attorney’s Office for the District of New Jersey has filed a parallel criminal action against Rentzer, who has pled guilty to those charges.
The SEC previously charged Hirsch and another customer of his with whom he had a similar kickback arrangement, and who entered into a partial settlement in that SEC case. Hirsch also pled guilty to parallel criminal charges filed by the U.S. Attorney’s Office for the District of New Jersey.
The SEC’s investigation was conducted by David Austin, Chevon Walker, Todd Brody, Matthew Lambert, Stephen Johnson and George Stepaniuk. The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the United States Attorney’s Office for the District of New Jersey and the Federal Bureau of Investigation in this matter.