SEC files fraud charges against former Refco brokers

By Scott Files

Published on April 06, 2006

The case charges Andreas Badian, an unregistered investment adviser with Rhino Advisers, Inc. and three former Refco brokers, Jacob Spinner, Jeffrey Graham and Mottes Drillman. The charges allege that Mr. Badian illegally directed the Refco Securities Brokers, Mr. Spinner, Mr. Drillman and Mr. Graham to short sell large amounts of Sedona stock to "clobber" the company's stock price.

During March of 2001, Mr. Badian was responsible for 40 percent of the stock trading that was done on Sedona's stock. This resulted in a significant drop in the stock price that previously had an average selling price of $1.43. During this timeframe, the stock dropped to .75 cents a share.

The SEC contends that trades were carried out using accounts that were controlled at Refco Securities and Pond Equities Corp., a registered brokerage firm that has a history of fines and censure by the NASD.

In a previous lawsuit involving Sedona Corp. in February of 2003, Mr. Badian's brother, Thomas, and Rhino Securities agreed to pay $1 million to settle similar charges of short selling, which is taking a position that the price of the stock will decrease.

Refco, once a leader in the world market of derivatives, filed for bankruptcy protection in October of 2005 in the wake of an accounting scandal.

Comment on this article →