FINRA Fines and Suspends Trader for Market Conduct Violations

Peter M. Rosten has agreed to a $25,000 fine and a four-month suspension in a settlement with the Financial Industry Regulatory Authority. Rosten, a trader and market maker with decades of experience at The Vertical Group, was accused of contravening securities rules through his trading activities in a thinly traded stock.

In December 2021, Rosten personally agreed to purchase up to one million shares of a stock at $1 per share. After acquiring an initial 250,000 shares, he began attempting to sell portions from his personal account. When his sell orders failed to execute over several weeks, he commenced placing limit buy orders for the same stock through a proprietary firm account at The Vertical Group.

FINRA found that these buy orders, placed at prices between $2.50 and $3.25, were not bona fide. The regulator stated Rosten should have known they created a false appearance of demand, artificially supporting the stock's price while he sold shares from his personal account. This activity narrowed the bid-ask spread and prompted the stock's first trades in over six months.

From January to March 2022, Rosten entered 44 such non-bona fide buy orders while selling 12,110 personal shares at an average price of $3.35. He ceased the activity after compliance personnel at his firm intervened. Despite the scheme, the trades resulted in a net loss for Rosten.

Rosten consented to the sanctions without admitting or denying the findings, settling allegations that he violated FINRA Rule 2010 by contravening the Securities Act. He remains registered with FINRA through his association with The Vertical Group.