There's no busi­ness like the bro­ker­age busi­ness

“Hotton is the 46-year-old for­mer stock­bro­ker who al­legedly duped the pro­duc­ers of the Broad­way mu­si­cal "Re­becca" into be­liev­ing he had lined up $4.5 mil­lion in fi­nanc­ing.”

The Pak Banker - - Front Page - Su­san An­tilla

IF reg­u­la­tors and bro­ker­age firms are se­ri­ous about restor­ing pub­lic con­fi­dence in the mar­kets, they will have to do bet­ter than they did in the pa­thetic case of Mark C. Hotton. Hotton is the 46-year-old for­mer stock­bro­ker who al­legedly duped the pro­duc­ers of the Broad­way mu­si­cal "Re­becca" into be­liev­ing he had lined up $4.5 mil­lion in fi­nanc­ing. Ac­cord­ing to law en­force­ment of­fi­cials, he even con­cocted a fic­ti­tious Aus­tralian guy, Paul Abrams, who would have been good for $2 mil­lion if only he hadn't keeled over from malaria when it was time to write his check. While the clue­less back­ers fell for his sto­ries, Hotton pock­eted finder's fees. "Re­becca" has been "post­poned in­def­i­nitely," ac­cord­ing to the show's web­site.

It's dis­tress­ing, but it shouldn't have come as much of a sur­prise from a man whose bro­ker­age in­dus­try records since 1993 re­veal a stolen-prop­erty charge, 16 cus­tomer dis­putes, a fir­ing, a lien and a bank­ruptcy. The real dis­grace here isn't Hotton, who is be­ing held with­out bail af­ter his ar­rest on two counts of fraud last month. The big­ger scan­dal is trumped-up claims like this one:

"Ul­ti­mately, Hotton's imag­i­na­tion was no match for the FBI, which un­cov­ered, with light­ning speed, his al­leged fi­nan­cial mis­deeds," said Man­hat­tan U.S. At­tor­ney Preet Bharara in an Oct. 15 press re­lease.

Light­ning speed? Now that is what I would call a real whop­per.

I first be­gan to contact Hotton's lawyers a year ago this month when I saw that Hotton con­tin­ued to work as a bro­ker af­ter fil­ing for Chap­ter 7 bank­ruptcy, but they weren't very talk­a­tive. Michael S. Finkel­stein, a lawyer on Long Is­land, told me to call him back at 4 p.m. on Nov. 22, but didn't an­swer that day, and never re­sponded to voice­mails. Sim­i­larly, voice­mails and e-mails that I left with three other Hotton lawyers since Oct. 8 af­ter the "Re­becca" flap erupted have gone unan- swered. I couldn't reach Hotton for com­ment.

Hotton has faced al­le­ga­tions of fi­nan­cial mis­deeds as far back as 1990, yet moved on to work at six bro­ker­age firms, in­clud­ing Laden­burg, Thal­mann & Co. and Op­pen­heimer & Co.

He was ac­cused of fraud in mul­ti­mil­lion-dol­lar law­suits filed be­fore any­one in­volved in "Re­becca" had ever heard of him. But there was noth­ing speedy about law en­force­ment's re­sponse un­til the vic­tims were at­ten­tion-grab­bing show-busi­ness types.

Hotton got a mod­est $60,000 from the pro­duc­ers of "Re­becca," ac­cord­ing to the U.S. at­tor­ney, and I sup­pose the crack in­ves­ti­ga­tors at the Fed­eral Bureau of In­ves­ti­ga­tion de­serve credit for get­ting to the bot­tom of one of his punier swin­dles.

Any­one truly in­ter­ested in watch­ing out for the pub­lic might have started pay­ing at­ten­tion af­ter Hotton bounced a check for $31,550 to Vilsmeier Auc­tion Co. in Mont­gomeryville, Penn­syl­va­nia, on April 25, 1990.

Hotton took pos­ses­sion of a 1985 Ford van and three other ve­hi­cles, thanks partly to a forged let­ter from a West­min­ster Bank of­fi­cer as­sur­ing that his ac­count had suf­fi­cient funds. Four months later, the real man­ager at the bank said in an af­fi­davit that the let­ter was bo­gus and signed by a per­son who didn't ex­ist.

Peo­ple who bounce checks and forge doc­u­ments don't be­long in the se­cu­ri­ties busi­ness, but Hotton, who pleaded not guilty to two fraud counts last month, man­aged to get a bro­ker's li­cense three years later any­way.

I asked Michelle Ong, a spokes­woman for the Fi­nan­cial In­dus­try Reg­u­la­tory Author­ity, how a bro­ker like Hotton could stay in the busi­ness as long as he had. She said that be­fore 2009, the com­plaints against Hotton had ei­ther been de­nied by his em­ploy­ers, or "set­tled for lit­tle money." She says Finra be­gan to in­ves­ti­gate Hotton in 2009. That's nice, I sup­pose, but three years later, Finra still has not an­nounced any sanc­tions.

Ong said that Finra knew Hotton had been con­victed of crim­i­nal pos­ses­sion of stolen prop­erty, which ap­par­ently isn't enough to con­vince reg­u­la­tors that a bro­ker shouldn't be in charge of other peo­ple's money.

In the se­cu­ri­ties busi­ness, there is this bril­liant idea that firms have a self-in­ter­est in toss­ing out bad guys. So I checked in with two firms that em­ployed Hotton. I sent a list of 11 ques­tions about Hotton's crim­i­nal record and cus­tomer com­plaints to Paul Caminiti, a spokesman for Laden­burg, and all he had to say was that Hotton left the firm in 2005 to join Op­pen­heimer..

On Oct. 15, the day Hotton was ar­rested, I called Noah Sorkin, a se­cu­ri­ties lawyer who worked at Op­pen­heimer when Hotton was there.

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