UPDATE 7.20.21: FINRA finally closed out their investigation into Laidlaw’s role in aiding market manipulation for their investment banking clients. The firm was fined $1.5 million, censored, and ordered to create real supervision checks for their brokers. FINRA found the firm didn’t supervise brokers who conducted wash trades crossed the trades, and “marked the close” all in an effort to control the price of a stock. It looks like Laidlaw’s COO, John Coolong, took the fall for the firm’s leadership and was suspended for 60 days. For now Matt Eitner, the CEO, escaped a personal fine or sanction but according to multiple former brokers the firm, Eitner, and Ahern are still believed to be under SEC and FBI investigation.
Original Text: May 12, 2020
The securities regulator for U.S. broker dealers has confirmed the men who run Laidlaw & Company are currently under investigation for directing a person who worked for them to commit securities fraud involving at least two public companies. On March 6 2020, FINRA marked Laidlaw’s president Matt Eitner, its Chief Compliance officer John Coolong, and the head of its investment banking business James Ahern as being under investigation. I was first to report on the level of misconduct and corruption that FINRA was investigating at Laidlaw in 2018, which included Eitner and Ahern’s alleged role in helping microcap bad actor Barry C. Honig execute a pump and dump scheme in multiple stocks. The Securities and Exchange Commission has also called in former Laidlaw brokers within recent months for investigative interviews according to two brokers who spoke on the condition of anonymity.
Eitner and Ahern have privately denied being under investigation to brokers, clients and staff that work for them. Additionally, in November Laidlaw hired a law firm known for questionable legal tactics, Kasowitz Benson Torres, to sue their former head of anti-money laundering, John Marinaccio, in New York State court for leaking information about the company’s internal workings. Marinaccio has stated in legal filings that he is in fact one of the whistleblowers who went to FINRA with documented evidence of securities violations.
FINRA said:
From January through September 2015, FINRA alleges that, a former General Securities Principal, acting at the direction of Mr. Ahern, violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10-b5 thereunder, and FINRA Rule 2010 and 2020. From October 1, 2014 through February 11, 2015, FINRA alleges the same violation concerning a different issuer.
This statement was repeated on Matt Eitner’s FINRA record record.
Rule 10-b5 is what the SEC charges for securities fraud. It is the same violation the government charged Barry Honig and his investing team. Honig settled with the SEC last year and agreed to a penny stock ban for his role as the ring leader in pump and dump schemes in over 40 stocks. Additionally, according to a subpoena the SEC issued to biomed company Mabvax ($MBVX), a victim in the SEC pump and dump complaint against Honig, the SEC was also seeking documents and communications Mabvax had with Laidlaw. The SEC subpoena was reviewed by this reporter. Barry Honig had admitted in court filings he was a client of Laidlaw who raised money for his investment in Mabvax ($MBVX). Luke Kottke, who still works for Laidlaw, was Honig’s registered representative.
FINRA did not name the stocks involved in the investigation. I have previously reported on Honig and Laidlaw’s alleged role in manipulating multiple public companies. At the heart of the allegations Eitner and Ahern devised a plan to force Laidlaw brokers to push their retail clients to buy into deals, that Honig was allegedly manipulating, to create volume in the stock and then hold clients stock until Honig and others could dump their stock while the price was artificially inflated.
If there wasn’t enough open market interest in a stock (to buy or sell) the Laidlaw executives under investigation would tell their brokers and operations team to cross trades. Cross trades can be used to ‘paint the tape,’ a form of illegal market manipulation whereby market players attempt to influence the price of a security by buying and selling it among themselves to create the appearance of substantial trading activity and volume in the stock.
Here is a text exchange between Jimmy Ahern and a laidlaw broker who was asking for help because he couldn’t get his client out of a stock. This text is believed to be an example of the alleged illegal trading activity FINRA is investigating Ahern and Eitner for.
As long as there is a change in the beneficial holder a trade is considered legal. Meaning when you buy or sell a stock, there has to be a real seller/buyer on the other side. But according to at least three former Laidlaw staff witness to these transactions that didn’t happen. As I have previously reported the operations staff at Laidlaw was directed by Ahern and Eitner to just place stock in other clients accounts until they could find a buyer or seller or put the stock in the firm’s account until they could ligitiamately sell it. This is called ‘parking stock’ and one of the reason’s guys at Stratton Oakmont (Wolf of Wall St. movie) went to jail. FINRA has also been presented with allegations of stock settlement rule violations. Laidlaw used Stern Agee to clear their trades during this time.
One of the llc’s Eitner and Ahern use to hide their own undisclosed stock ownership is called PPLL – it stands for Pump Pump Loose Loose according to Matt Eitner’s own text messages reviewed by this reporter.
Eitner and Ahern often cut brokers out of the pump pump loose loose group if they complained about selling their clients stocks they thought wouldn’t perform or issued unreliable earning reports. Brokers were forced to sign non disparagement agreements when they left otherwise Laidlaw would make moves to keep their high net worth clients. One former Laidlaw broker, Kevin Wilson, wasn’t silent after he left and wrote Laidlaw clients warning they had invested in shady deals after journalist Chris Carey of Sharesleuth.com reported on a network of paid promoters and fake people writing promising analysis of stocks in the Honig scheme that Laidlaw also sold.
Laidlaw used an attorney, who worked with Honig’s long time securities attorney Harvey Kesner, at Sichenzia Ross Ference Kesner LLP to sue Kevin Wilson in early 2018 in NY state court. The lawsuit says:
On March 7, 2018 at 2:45 p.m., Defendant [Wilson] sent an email to a Laidlaw customer at his email address Kpaulmec@aol.com in which he stated, Laidlaw is a scam and liable for your losses. Get your money out before fbi seizes it. You have been played for years by this group of pump and dump scam artists !! Google Barry Honig and get your hard earned money back” and then Defendant provided the Sharesleuth article link.
Wilson also texted the Sharesleuth article link to brokers still working at Laidlaw with a message saying “Those guys shouldn’t bend over for the soap”. Matt Eitner and Jimmy Ahern took that as meaning Wilson was saying they could be looking at prison time, according to the lawsuit. Wilson also wrote others saying the company, via John Coolong, kept two sets of books and that Jimmy Ahern, the Head of Capital Markets, would brag about how much money he was making while doing cocaine.
The court docket isn’t clear if Laidlaw dropped the suit or settled with Wilson and silenced him.
Honig would also socialize with Eitner, Ahern, and other brokers in the pump pump loose loose group. In one case, a broker interviewed by this reporter, says Honig attended a Madison Square Garden sporting event with Laidlaw execs who rented a box and was heard directing Laidlaw employees on how to conduct trades that would benefit Honig.
John Coolong, who holds a series 24 license for broker supervision, is being investigated for failure to establish, maintain and enforce written supervisory procedures reasonably designed to ensure that a former General Securities Principal complied with Section 10(b) of the Securities Exchange Act of 1934 and Rule 10-b5 thereunder, and FINRA Rule 2010 and 2020. This is the first FINRA disclosure notice for Coolong. Eitner and Ahern have multiple previous customer complaints.
After my initial reporting on Laidlaw’s alleged role in assisting Honig in securities violations multiple arbitration claims have been filed by Laidlaw’s retail clients against the firm for putting main street investors in unsuitable investments or buying stock they did not authorize. When a retail client files a complaint with the regulator it has to go on the broker’s record in FINRA’s tracking system called Broker Check. Matt Eitner and Jimmy Ahern have used a strategy to report the customer complaints and lawsuits under the name of the stock broker who is the registered representative for the Laidlaw client even though they are also personally named in the lawsuits. The industry term for these complaints is called disclosures.
Matt Eitner and Jimmy Ahern did not respond to emails for comment.
Editor Note 5.14.20: This story has been updated with the text from Jimmy Ahern
Laidlaw v. Kevin Wilson
Laidlaw & Company v. br… by Teri Buhl on Scribd
do marty and steven still own laidlaw?