Securities Exchange Commission Charges Broker In Stock Manipulation Scheme

Through ‘coordinated trading events,’ as the Securities Exchange Commission (SEC) calls them, Gibbsboro, New Jersey-based broker James David O’Brien appears to have made $10 million for himself.

The Sec has filed a complaint in the U.S. District Court for the Southern Division of New York against O’Brien for running a ‘multi-year market manipulation scheme.’ O’Brien has been charged with violations of the Securities Act. Disgorgement of the allegedly ill-gotten gains and prejudgment interest, injunctive relief, and civil penalties have been sought by the SEC.

How did he do it?

O’Brien executed over 18,000 co-ordinated trades in 18 accounts that he opened in his and his wife’s name across 14 different brokerage firms. This was done between 2015 and 2020.

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The strategy appears to be based on creating trading interest in a particular stock based on the trading volume, with the end game being to allow him to take a position and liquidate the same at an opportune moment which would typically be at what the SEC has called ‘artificially high prices.’

75% of these ‘coordinated trading events’ netted a profit for him, aggregating to over $9.6 million.

Prior history

O’Brien has been a registered broker with six different firms. His longest stint, from 1994 to 2013, almost 20 years, appears to have been with Janney Montgomery Scott, as per his BrokerCheck profile where, as per the SEC, “his employment was terminated in 2013.”

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Thereafter, he appears to have been referring to himself either as self-employed or as a trader.

No customer dispute or termination appears on his BrokerCheck record.

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