SEC Charges Broker-Dealer and CEO With Supervision Failures Related to Hedge Fund Valuation Scheme

The Securities and Exchange Commission yesterday charged New York-based broker-dealer AOC Securities LLC, and its former chief executive officer, Ronaldo Gonzalez, with failing to supervise an AOC broker who provided inflated price quotes for certain securities to a significant customer of AOC. According to the SEC’s orders, Frank Dinucci Jr., a broker at AOC, provided inflated price quotes to a New York-based investment adviser, Premium Point Investments LP. The orders find that PPI traders dictated to Dinucci the prices at which he should value certain mortgage-backed securities in PPI funds’ portfolios. In return, the PPI traders promised to send securities trades to AOC.