The Unemployed Divorcee Sister of the CEO

or Register to post new content in the forum



  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jan 7, 2010 1:09 pm

An irreverent Wall Street Blog

by Bill Singer

Blog Home | Past Entries

Did You Hear
the One About the CEO, His Parents, and His Divorced Sister?

Written: January 7, 2010

Okay, so, here’s the teaser:

[T]he next trading day, Monday, March 18,
Kirincic began placing orders to purchase substantial amounts of KILN stock for
his sister, Susan Paduano, and would continue to do so through April 22 (the
"Trading Period"). Kirincic, who testified that he exercised time and
price discretion over Paduano's orders and also determined how to route them in
the market, placed most of these orders not through Herzog but through BRUT, an
electronic communications network ("ECN"), for execution. A
significant feature of trading on ECNs, as Applicants' expert explained, is
that, when a broker places an order with an ECN at a price above the highest,
or "inside" bid, the ECN automatically displays that bid as its own,
creating a new inside bid price that is displayed to the market. According to
Applicants' expert, of the 65 orders Kirincic placed for Paduano on the BRUT
ECN during the Trading Period, 41 of them were priced at or above the inside
bid, and an additional 20 of them were priced at or above the inside ask; more
than 93% of Kirincic's orders were therefore responsible for setting a new
inside bid. Paduano's KILN purchases would total over $200,000 in a five-week
period, account for 43% of the total trading volume in KILN, and increase the
price of KILN over 57%.

In March 2002, Paduano was divorced,
unemployed, caring for three children, and receiving as income only $3,600 per
month in alimony. She nevertheless testified that she gave instructions to
Kirincic to purchase shares in large dollar amounts, such as $25,000 or
$50,000, depending on what she was "comfortable with" at the time.17 During the hearing,
neither Paduano nor Kirincic could recall specific details about any of the
orders she gave Kirincic.18 Although Paduano had not been an active
purchaser of KILN shares in the four years preceding 2002 and had purchased
none in January or February 2002,19 she testified that she wanted to acquire
KILN stock because "it was [her] desire to always hold a large position in
the company" that her ex-husband (formerly a partner of Kirincic and
Lindner) and brother had built. The KILN shares were intended, she said, to be
a "legacy for my children." Although each of Paduano's children had a
custodial account at another financial institution, all the KILN purchases
Paduano made in 2002 were bought through her own account at Kirlin. There is no
evidence that Paduano transferred any of the acquired KILN shares to her
children's accounts . . .

See Page 7 of the

Do I
have your attention?  Is your interest
piqued?  Well,



Jan 7, 2010 2:06 pm

LOL!  And they honestly think they will get away with it?