On July 9, 2002 the NASD charged Hornblower & Weeks with violating a May 7, 2002 Order that banned the brokerage firm from issuing research reports for six months. The NASD also claims that the latest research reports – the ones that never should have been generated in the first place – were exaggerated, misleading, and failed to disclose material facts.
On May 7, 2002, the NASD suspended Hornblower & Weeks from all research activities for six months, after finding that the firm had issued a misleading, baseless research report recommending the common stock of MyTurn.com. That research report, which contained a buy recommendation and a $55 target price for MyTurn stock (which had been trading at about $9 per share) failed to mention that the Company needed additional financing and was being personally funded by its Chairman of the Board.
The May 7th Order censured and fined the brokerage firm, and suspended its President, John Rooney, from association with any NASD member. Rooney also was fined $85,000 for his role in the misconduct.
Within weeks after the ban was imposed, Hornblower & Weeks allegedly was back at it once again, issuing a research report for American Diversified Group, Inc. in late May. That report, which was available on at least two Internet sites, failed to disclose that American Diversified had experienced significant losses, had received an opinion from its auditors casting doubt about the Company’s ability to continue as a going concern, and had to rely on loans from officers and directors to pay expenses.
The NASD also charged that the Hornblower & Weeks research report “made exaggerated, unwarranted and misleading statements,” including claims that American Diversified “is positioned as a premier provider of communication products and enhanced value-added services…,” and that the Company “is positioned to exploit the upside potential of the vast expansion of the Internet.” That sounds a lot like the same concerns that the NASD voiced after looking at the MyTurn report.
Hornblower & Weeks was originally founded by Henry Hornblower, in 1888. By 1977 it had become Hornblower Weeks Noyes & Trask Inc., and merged with Loeb Rhoades to become Loeb Rhoades Hornblower, the fourth largest brokerage concern in the United States.
In 1979 it merged again with Shearson Hayden Stone, now Shearson-American Express, to become the second largest.
We currently have the following pieces in our inventory that were issued to this historic firm: