## Facts

- Kirlin Securities, Inc. was a FINRA-member broker-dealer; Anthony Kirincic was its co-CEO, and Andrew Israel was its head equity trader.
- Kirlin’s publicly traded parent company’s stock (KILN) faced Nasdaq delisting unless its closing bid price reached at least $1.00 for 10 consecutive trading days within a compliance period.
- During the relevant period, Kirincic placed large KILN buy orders through Kirlin in family accounts over which he had control or influence, including an account of his divorced, unemployed sister who had not actively bought KILN for years.
- Kirincic repeatedly entered buy orders on an ECN at prices above the prevailing inside bid, obtained partial fills, then canceled and re-entered orders at higher prices, repeatedly moving the inside market upward.
- Family-account trading constituted about 79% of KILN trading volume during the period; KILN’s price rose from roughly $0.68 to about $1.15, then fell after the concentrated trading ended.
- FINRA also found that Kirlin and Israel failed to provide best execution on customer orders.
- FINRA further found that Kirincic signed customers’ names on transactional documents without proper authorization.
- FINRA expelled Kirlin and barred Kirincic and Israel from the securities industry; the Applicants sought SEC review.

## Issues

1. Whether substantial evidence supported findings that Kirlin, Kirincic, and Israel engaged in manipulative trading to raise or maintain KILN’s price, violating Exchange Act § 10(b), Rule 10b-5, and NASD Conduct Rules 2120 and 2110.
2. Whether substantial evidence supported findings that Kirlin and Israel failed to provide best execution to customers.
3. Whether substantial evidence supported findings that Kirincic improperly signed customer names on transactional documents in violation of NASD Conduct Rule 2110.
4. Whether FINRA’s sanctions were excessive or oppressive under Exchange Act § 19(e), and if so, what modifications were warranted.

## Decision

- The SEC sustained FINRA’s findings that Kirlin, Kirincic, and Israel manipulated KILN’s market through concentrated, price-setting trades that created an artificial price level.
- The SEC sustained FINRA’s findings that Kirlin and Israel failed to provide best execution.
- The SEC sustained FINRA’s findings that Kirincic improperly signed customer names without proper authorization.
- The SEC modified FINRA’s sanctions while maintaining serious remedial relief.

## Legal Principles

- Market manipulation under Exchange Act § 10(b) and Rule 10b-5 includes trading intended to mislead investors by artificially affecting prices or market activity, even without false public statements.
- Manipulative intent may be inferred from circumstantial evidence, including domination of trading volume, strategic order placement that moves the inside market, timing tied to an external pressure (e.g., listing requirements), and implausible non-manipulative explanations.
- Broker-dealers must use reasonable diligence to obtain the most favorable terms reasonably available for customer orders (best execution); failures in routing or handling orders can violate self-regulatory organization rules.
- Signing customer names on transactional documents without proper authorization violates standards of commercial honor and just and equitable principles of trade and undermines record integrity.
- On review of SRO discipline under Exchange Act § 19(e), the SEC sustains findings supported by substantial evidence and assesses whether sanctions are excessive or oppressive; sanctions must be remedial and aimed at investor and market protection.

## Conclusion

The SEC upheld FINRA’s determinations that Kirlin and its principals manipulated their parent’s stock price to avoid delisting, failed to provide best execution, and used improper customer signatures, and it modified—while largely preserving—severe remedial sanctions to ensure proportionality and investor protection.


In re Kirlin Sec., Inc., Exchange Act Release No. 61135 (Dec. 10, 2009)