Stuart Rabner, Attorney General
Division of Consumer Affairs
Stephen B. Nolan, Acting Director
For Immediate Release:
October 4, 2006
For Further Information Contact:
Kara Wood 973-504-6327
Consumer Information:


First Montauk Pays $475,000 to Settle Investigation with New Jersey as Chairman
and Vice Chairman Agree to Resign from Parent Company

NEWARK - First Montauk Securities Corp. (“First Montauk”) has been ordered to cease and desist from violations of the New Jersey Uniform Securities Law and has paid $475,000 in civil monetary penalties, under the terms of a consent order announced today by Attorney General Stuart Rabner, Consumer Affairs Acting Director Stephen B. Nolan and Bureau of Securities Chief Franklin L. Widmann.

Under the terms of a separate agreement with the New Jersey Bureau of Securities, Chairman Herbert Kurinsky and Vice Chairman William Kurinsky each agreed to resign from those positions and the Board of Directors of First Montauk's parent company, First Montauk Financial Corp.

“First Montauk lied to its customers and committed securities fraud, all in an effort to protect the company from losses,” said Acting Director Nolan. “Under this consent order, First Montauk must evaluate its business practices and institute reforms aimed at preventing this very type of fraudulent conduct. The resignations of Herbert and William Kurinsky are among the reforms that will be put into place to ensure consumers are protected in the future.”

The settlement resolves allegations that First Montauk, based in Red Bank, failed to supervise an employee, participated in misrepresentations and omissions of key facts to investors that resulted in securities fraud, and participated in market manipulation with respect to the resale of below investment grade bonds that caused substantial losses to investors, which included New Jersey residents.

“Because of this settlement, First Montauk has made changes in its management and supervision practices and will hire an outside expert to examine and reform its supervisory practices,” Acting Director Nolan said. “We are confident that, through this continuing process, our goal of reforming First Montauk will be realized.”

From the fall of 1997 through the spring of 2001, a First Montauk agent sold high concentrations of Nextel International Bonds to his clients. It was during this time that the agent, despite not being registered with the Bureau, sold the bonds to New Jersey residents with the assistance of another agent, in direct violation of the New Jersey Uniform Securities Law.

In 2001, as the price of the Nextel International Bonds began to fall, First Montauk, fearing that they might bear ultimate responsibility for mounting margin call obligations due to the agent's actions, stepped in to purchase the bonds from the agent's clients and sell them out to other First Montauk clients. The agent left the securities business in 2001.

The selling points used by First Montauk to solicit sales of Nextel International Bonds were misleading and failed to disclose key information including the speculative risk of the bonds, that the inventory was coming from in-house accounts and that there was little or no market for the bonds apart from First Montauk's own trading.

The State alleged that First Montauk's failure to disclose information regarding certain risk factors of the Nextel International Bonds and their failure to establish or enforce procedures necessary to supervise its agents constituted violations of the New Jersey Securities Law and are grounds to suspend or revoke the broker-dealer registration of First Montauk.

“Time and time again we see investors harmed by the fraudulent activity of firms and their representatives,” BOS Chief Widmann said. “The message here is that the Bureau will continue to enforce the law and these parties will pay the price for behavior that harms consumers.”

The consent order and agreement were entered into without First Montauk or the Kurinskys admitting or denying the Bureau's findings. The investigation was conducted for New Jersey by Chief of Enforcement Richard Barry, Supervising Investigators James Lane and Michael McElgunn and Investigating Attorney Peter C. Cole of the Bureau of Securities.


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