SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 41725 / August 11, 1999
Admin. Proc. File No. 3-9041
Al Rizek
Olympic Tower 901
Condado
San Juan, Puerto Rico
00911
OPINION OF THE COMMISSION
BROKER-DEALER PROCEEDINGS
Churning of Customer Accounts
Vice president of registered broker-dealer churned the accounts of
five customers. , it is in the public interest to bar vice president
from association with any broker or dealer; to issue a
cease-and-desist order; to fine vice president $100,000; and to order
disgorgement plus prejudgment interest.
APPEARANCES
John R. Squitero and Jose R. Riguero, of Katz, Barron, Squitero, Faust
& Berman, P.A., for Al Rizek.
Mitchell E. Herr, for the Division of Enforcement.
Appeal filed March 16, 1998
Briefing completed June 25, 1998
Oral argument March 2, 1999
I.
Al Rizek, who during the relevant period was a vice president of
PaineWebber Incorporated of Puerto Rico ("PWPR"), a registered
broker-dealer, appeals from the decision of an administrative law
judge. The Division of Enforcement also appeals with respect to the
sanction imposed on Rizek.
The law judge found that, from about January 1, 1993 through March 31,
1994, Rizek willfully violated Section 10(b) of the Securities
Exchange Act of 1934^ and Rule 10b-5 thereunder
by churning the accounts of five customers. The law judge barred Rizek
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
Al Rizek Olympic Tower 901 Condado San Juan,
Churning of Customer Accounts
Vice president of registered broker-dealer churned the accounts of five customers.
Al Rizek, who during the relevant period was a vice president of PaineWebber Incorporated of
The Division of Enforcement also appeals with respect to the sanction imposed on Rizek.
The law judge found that, from about January 1, 1993 through March 31, 1994, Rizek willfully
He also fined Rizek $100,000, ordered him to disgorge $277,038 plus prejudgment interest, and
The Division appeals solely with respect to the law judge's failure to impose a permanent bar.
Rizek began recommending that certain customers follow his strategy of trading United States
Rizek admittedly magnified the risk by recommending that his customers purchase the bonds on
Since the prices of such bonds move in tandem, the only result of such trading was to
Similarly, only a sophisticated investor could have understood the strategy and made
Prior to opening his account with Rizek in 1990, he kept his money in a savings account.
Figueroa agreed with this suggestion and, accordingly, "speculation" was ranked last among
The 1993 turnover rate of Figueroa's net equity was 19.3, and the ratio of costs to equity
The 1993 turnover rate of Donato's net equity was 14.3, and the cost to equity ratio was 33%.
The cost to equity ratio determines the percentage of return on the customer's average net
Disgorgement is designed to deprive a wrongdoer of his ill-gotten gains.
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