A Securities and Exchange Commission administrative-law judge yesterday (Aug. 5) banned Ian O. Mausner and Douglas F. Drennan from the securities business. Mausner, was a cofounder and chief executive officer of J.S. Oliver, an investment advisory firm that operated out of Mausner's luxury San Diego home. Drennan was an investment advisor for the firm.
J.S. Oliver was involved in a practice called "cherry-picking." At the end of a trading day, the firm steered winning trades to hedge funds in which Mausner and his family had invested. The less-profitable trades were put in the accounts of other clients, who suffered more than $10 million in damages.
The securities agency also charged that Mausner and Drennan misused so-called "soft dollars," a means of paying firms for their services in commission credits instead of in cash. The securities agency charged that Mausner, with Drennan's assistance, misappropriated more than a million dollars in soft dollars for purposes that did not benefit clients, such as payments related to Mausner's divorce.
J.S. Oliver and Mausner are ordered to disgorge $1.4 million and Drennan $482,000. Oliver will pay a fine of $15 million, Mausner $3 million and Drennan $410,000.