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UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 80568 / May 1, 2017

ADMINISTRATIVE PROCEEDING

File No. 3-17959

In the Matter of

GREGORY REYFTMANN, 

Respondent.

ORDER INSTITUTING ADMINISTRATIVE 

PROCEEDINGS PURSUANT TO SECTION 

15(b) OF THE SECURITIES EXCHANGE 

ACT OF 1934 AND NOTICE OF HEARING 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative proceedings be, and hereby are, instituted pursuant to 

Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Gregory 

Reyftmann (“Respondent” or “Reyftmann”).

II.

After an investigation, the Division of Enforcement alleges that:

A. RESPONDENT

1. From February 2005 until June 2010, Reyftmann was a registered 

representative associated with Linkbrokers Derivatives LLC (“Linkbrokers”), a broker-dealer

registered with the Commission. Reyftmann has not been associated with a registered entity since 

his voluntary separation from Linkbrokers in 2010. At all relevant times, Reyftmann held Series 7, 

24, 55 and 63 licenses, and he obtained his Series 24 license on January 21, 2009. Reyftmann, 43

years old, currently resides in France. 
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B. OTHER RELEVANT ENTITIES AND INDIVIDUALS

1. Linkbrokers, a Delaware limited liability company formed in 2002, was a 

broker-dealer registered with the Commission from 2003 to September 2014, with its principal 

place of business in New York, New York. On August 14, 2014, the Commission accepted 

Linkbrokers’ Offer of Settlement and instituted administrative and cease-and-desist proceedings, 

pursuant to Sections 15(b) and 21C of the Exchange Act, ordering that Linkbrokers (1) cease and 

desist from committing or causing any violations and any future violations of Section 15(c) of the 

Exchange Act, (2) is censured, and (3) pay disgorgement of $14,000,000 to the Commission. In the 

Matter of Linkbrokers Derivatives LLC, File No. 3-16017 (Aug. 14, 2014).

2. Benjamin Chouchane (“Chouchane”), 42 years old, was a registered 

representative who acted as a sales broker at Linkbrokers from February 2005 until December 2010. 

On June 12, 2013, he pled guilty in a criminal case arising from the same conduct discussed herein, 

United States v. Leszczynski, No. 12-cr-00923 (S.D.N.Y.). On November 14, 2013, he was 

sentenced to twenty-four months imprisonment, two years of supervised release, and was ordered to 

pay $5 million in restitution. On January 14, 2014, a final judgment was entered by consent 

against Chouchane, permanently enjoining him from future violations of Section 17(a) of the 

Securities Act of 1933 (“Securities Act”), and Section 10(b) of the Exchange Act and Rule 10b-5 

thereunder, and ordering him to pay $2,449,577 in disgorgement and prejudgment interest, in the 

related case SEC v. Leszczynski, et al., Civil Action No. 12-cv-07488 (S.D.N.Y.). The 

Commission subsequently accepted Chouchane’s Offer of Settlement and instituted administrative 

proceedings, pursuant to Section 15(b) of the Exchange Act, ordering that Chouchane be barred 

from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer 

agent, and from participating in any offering of a penny stock. In the Matter of Benjamin 

Chouchane, File No. 3-15739 (Feb. 4, 2014).

3. Marek Leszczynski (“Leszczynski”), 46 years old, was a registered 

representative who acted as a sales broker at Linkbrokers from March 2005 until December 2010. 

On August 20, 2013, he pled guilty in a criminal case arising from the same conduct discussed 

herein, United States v. Leszczynski, No. 12-cr-00923 (S.D.N.Y.). During his allocution when 

pleading guilty for his role in the scheme, Leszczynski stated under oath that Reyftmann instructed 

him on how to add markups to trades placed for customers. On January 30, 2014, he was sentenced 

to eighteen months imprisonment, two years of supervised release, and ordered to pay $1.5 million 

in restitution. On January 14, 2014, a final judgment was entered by consent against 

Leszczynski, permanently enjoining him from future violations of Section 17(a) of the Securities 

Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and ordering him to pay 

$1.5 million in disgorgement, in the related case SEC v. Leszczynski, et al., Civil Action No. 12-

cv-07488 (S.D.N.Y.). The Commission subsequently accepted Leszczynski’s Offer of Settlement 

and instituted administrative proceedings, pursuant to Section 15(b) of the Exchange Act, ordering 

that Leszczynski be barred from association with any broker, dealer, investment adviser, municipal 

securities dealer, or transfer agent, and from participating in any offering of a penny stock. In the 

Matter of Marek Leszczynski, File No. 3-15738 (Feb. 4, 2014).
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4. Henry A. Condron (“Condron”), 37 years old, was a registered 

representative who acted as a sales trader and middle-office assistant at Linkbrokers from February 

2005 until October 2010. On October 5, 2012, he pled guilty in a criminal case arising from the 

same conduct discussed herein, United States v. Condron, No. 12-cr-768 (S.D.N.Y.). On February 

20, 2014, he was sentenced to serve 18 months of probation and pay $207,675 in restitution. On 

January 14, 2014, a final judgment was entered by consent against Condron, permanently 

enjoining him from future violations of Section 17(a) of the Securities Act, and Section 10(b) of 

the Exchange Act and Rule 10b-5 thereunder, and ordering him to pay $207,675 in disgorgement 

and prejudgment interest, in the related case SEC v. Leszczynski, et al., Civil Action No. 12-cv07488 (S.D.N.Y.). The Commission subsequently accepted Condron’s Offer of Settlement and 

instituted administrative proceedings, pursuant to Section 15(b) of the Exchange Act, ordering that 

Condron be barred from association with any broker, dealer, investment adviser, municipal 

securities dealer, or transfer agent, and from participating in any offering of a penny stock. In the 

Matter of Henry Condron, File No. 3-15740 (Feb. 4, 2014).

5. Aaron Nowak (“Nowak”), 37 years old, was a registered representative who 

acted as a sales trader and middle-office assistant at Linkbrokers from November 2004 until April 

2011. On December 11, 2015, the Commission accepted Nowak’s Offer of Settlement and 

instituted administrative and cease-and-desist proceedings, pursuant to Section 8A of the Securities 

Act, Section 15(b) of the Exchange Act, and Section 9(b) of the Investment Company Act of 

1940, ordering that Nowak (1) cease and desist from committing or causing any violations and 

any future violations of Section 17(a)(2) and (3) of the Securities Act, (2) be barred from 

association with any broker, dealer, investment adviser, municipal securities dealer, or transfer 

agent; prohibited from serving or acting as an employee, officer, director, member of an advisory 

board, investment adviser or depositor of, or principal underwriter for, a registered investment 

company or affiliated person of such investment adviser, depositor, or principal underwriter, and 

barred from participating in any offering of a penny stock, with the right to apply for reentry after 

three years, and (3) pay a civil money penalty of $5,000 to the Commission. In the Matter of Aaron 

Nowak, File No. 3-16999 (Dec. 11, 2015).

C. ENTRY OF THE INJUNCTION

1. On October 5, 2012, the Commission filed a complaint in the United States 

District Court for the Southern District of New York against Reyftmann and others concerning the 

same conduct described below. Securities and Exchange Commission v. Marek Leszczynski, et 

al., Civil Action Number 1:12-cv-7488.

 

2. On February 9, 2015, a final judgment by default was entered against 

Reyftmann, permanently enjoining him from future violations of Section 17(a) of the Securities 

Act of 1933 (“Securities Act”) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 

3. The allegations in the Commission’s complaint covered the same conduct as 

the allegations contained herein. Reyftmann failed to appear in the civil action and has not 
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acknowledged any wrongdoing or offered any assurances against future violations of the securities 

laws.

D. FRAUDULENT MARKUP/MARKDOWN SCHEME

1. From at least 2005 through at least February 2009 (the “relevant period”),

Reyftmann and others perpetrated a fraudulent markup/markdown scheme by falsifying trade 

execution prices and embedding hidden markups or markdowns on over 36,000 customer 

transactions. Through this fraudulent scheme, Reyftmann and other Linkbrokers employees 

involved in the scheme defrauded customers of $18.7 million.

2. During the relevant period, Linkbrokers acted as an interdealer broker 

predominately for market counterparties and institutional customers dealing in equities and fixed 

income products. Linkbrokers acted as an agent on behalf of its customers and consistently 

marketed and advertised itself as an agency-only business, meaning Linkbrokers did not trade as a 

principal in its own account. Linkbrokers executed large volumes of securities trades on behalf of 

customers for low commissions. According to Linkbrokers’ internal records it was to charge its 

customers flat commission rates between $0.005 and $0.02 per share.

3. Reyftmann was the head of Linkbrokers’ “Cash Desk” during the relevant 

period, and Chouchane and Leszczynski were sales brokers on the Cash Desk. Reyftmann, 

Chouchane and Leszczynski were responsible for finding customers, developing relationships, and 

taking orders from customers to purchase and sell securities on their behalf. Reyftmann led the 

fraudulent scheme and urged and encouraged others on the Cash Desk to participate in it. Condron 

and Nowak served as “middle-office assistants” who maintained and updated Linkbrokers’ internal 

“trade blotter,” which was a software-generated spreadsheet that contained detailed information 

about trades executed by the Cash Desk. The trade blotter contained three separate price fields: (1) 

the actual execution price received by Linkbrokers; (2) the gross price—the price that included an

undisclosed markup/markdown; and (3) the net price—the gross price plus the agreed upon 

commission. 

4. The undisclosed markup/markdown scheme generally worked as follows. 

Reyftmann or another sales broker involved in the scheme (Chouchane or Leszczynski) would

receive a customer order either by telephone, instant message, or email. The sales broker would 

give the order to a sales trader, who executed the trade. After the order was executed, a middleoffice assistant recorded the actual execution price on the trade blotter and informed the sales 

broker of the execution. Shortly after the trade was executed, Reyftmann or another sales broker 

involved in the scheme examined other market executions in or around the time of the actual 

execution, to determine whether there was any stock price fluctuation. If there was sufficient stock 

price fluctuation at the time of the trade sufficient to conceal the fraud from the customer, the sales 

broker instructed the middle-office assistant to record a false execution price in the gross price field 

on the internal trade blotter. The middle-office assistant and/or the sales broker then reported the 

gross price (i.e. the false execution price) to the customer as the actual execution price, and tacked 

on the agreed-upon commission to arrive at the net price. The customers thus paid not only the 
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agreed-upon commission charged, but also the fraudulent secret profit that Reyftmann or one of his 

cohorts embedded in the price they reported to the customer as the actual trade price.

5. For example, on February 3, 2005 at 9:44 a.m., a customer sent Reyftmann 

an email placing an order to sell short 16,000 shares of Mercury Interactive Corp. (“MERQ”). 

Linkbrokers then executed the trade, short-selling 16,000 shares of MERQ on the customer’s 

behalf at $47.6390 per share. The trade blotter reflected an execution price of $47.6390, a gross 

price of $47.5390, and a net price of $47.5290. At 9:57 a.m., Reyftmann emailed the customer a 

trade recap confirming the trade at the false execution price of $47.5390 per share. The 

commission for this transaction was $0.01 per share, resulting in a total commission of $160 for 

this trade, which Linkbrokers charged the customer. However, Reyftmann failed to disclose the 

additional fraudulent markdown of $1,600.

6. Reyftmann knew that the prices and/or commissions that he, the other 

participants in the scheme, and Linkbrokers reported to their customers were false because he 

knew the prices at which the transactions were actually executed were different from the gross 

prices reported to the customers, and because he and the others involved in the scheme created the 

fictitious gross prices themselves.

7. Reyftmann also knew that the purpose of reporting the gross price to 

customers as the actual execution prices was to take a secret profit for Linkbrokers above the 

agreed-upon commission. On February 7, 2005, Reyftmann, Condron and others received an 

email from an officer of Linkbrokers’ parent company explaining that the additional gross price 

field on the trade blotter was necessary “for those trades that you do where you can actually 

execute the trade at a better price than you agree with the client (i.e. where you can make a couple 

of cents even before you’ve added in the commission).” In other emails, an IT specialist described 

to Reyftmann, among others, that Linkbrokers’ proprietary software has two different commission 

fields—one for actual total commission charged and one for the commission amount that would be 

provided to the customer. Reyftmann also received an email in which Condron requested that the 

IT specialist ensure that the customer will “never see the execution price” on any customer 

statements or trade confirmations.

8. Reyftmann and the others involved in the fraud ensured the scheme was 

difficult for customers to detect by selectively engaging in it only when the volatility in the 

market was sufficient to conceal the fraud. 

E. FRAUDULENT LIMIT ORDER PROFIT-STEALING SCHEME

1. At times during the relevant period, Reyftmann and some of his colleagues

employed a second scheme to defraud customers. Specifically, at times, when a customer placed a 

limit order and there was a favorable intraday movement in the price of the security, Reyftmann 

instructed others to take advantage of favorable intraday price movements to steal a piece of a 

profitable customer trade. 
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2. A “limit order” refers to an order to buy or sell a security at a specific price 

or better. For example, a customer could place a limit order to buy 100 shares of ABC stock at a 

price not greater than $10.00 per share. If the broker can fill the order at that price or better, it 

should do so. But if the price of ABC stock is above the price specified by the customer in the 

limit order, the shares will not be purchased.

3. The limit order scheme was conducted as follows. When a customer placed 

a limit order, a member of the Cash Desk would execute it in full. Instead of reporting the full

transaction to the customer, however, Reyftmann would look for an opportunity to buy or sell the 

same stock at a better price than the price at which the customer’s trade was executed. When such 

a circumstance arose, Reyftmann instructed the sales trader to either buy back some shares at the 

now-lower price or resell some shares at the now-higher price, and keep the profit. Then

Reyftmann instructed members of the Cash Desk to falsely report to the customer that they were 

only able to execute a portion of the limit order at the requested price. They did not disclose to 

their customers that they had improperly bought back or sold a portion of the full order for their 

own benefit.

4. For example, on April 26, 2007 from 2:48 p.m. until 2:49 p.m., Linkbrokers 

executed a customer’s order to sell 22,576 shares of Qualcomm, Inc. (“QCOM”) at an average 

price of $45.7500. At 3:41 p.m., Linkbrokers bought back 3,000 shares—shares that should have 

been allocated to the customer—for an average price of $45.3500. At 4:30 p.m. a member of the 

Cash Desk falsely reported to the customer that Linkbrokers was only able to sell 19,576 shares for 

the customer and was not able to fill the remaining shares ordered by the customer. At 4:40 p.m., 

despite having sold 22,576 shares, Linkbrokers allocated sell executions representing only 19,576 

shares of QCOM to its customer for a gross execution price of $45.7500 per share. Linkbrokers 

recognized an additional secret profit of approximately $1,200 on the purchase of the 3,000 shares. 

Linkbrokers did not inform the customer of its sale of 3,000 QCOM shares that should have been 

allocated to the customer. Instead, Linkbrokers only disclosed that it received a commission of 

$135.07 on the customer’s sale of 19,576 shares.

5. Reyftmann and the other participants in the scheme knew that they were 

making misstatements to the customer when they represented, either orally or in writing, that they

had been unable to fill a particular limit order in its entirety, since they were aware that the order 

had initially been fully executed.

F. REYFTMANN PROFITED FROM THE FRAUDULENT SCHEMES

1. Reyftmann and the other Linkbrokers’ employees involved in the fraud used 

these two fraudulent schemes to steal from customers on over 36,000 customer transactions placed 

through the Cash Desk over a period of more than four years. Overall, approximately 40% of the 

revenue generated from trading on the Cash Desk during the relevant period was attributable to the 

fraudulent schemes, for a total of $18.7 million in fraudulent profits. 
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2. Reyftmann’s compensation was directly tied to the Cash Desk’s gross 

revenue. Reyftmann received substantial performance bonuses because he and others 

substantially increased revenue through the fraudulent schemes described above. As set forth in 

the table below, Reyftmann realized over $3 million in ill-gotten gains from the fraudulent 

schemes. This amount was calculated by multiplying the bonus Reyftmann received for a 

particular year by the percentage of the profits of the Cash Desk attributable to the fraudulent 

schemes during that year: 

Year Reyftmann’s Bonus Percentage of Cash 

Desk’s Revenue 

Attributable to the 

Fraud

Reyftmann’s Ill-gotten 

Gains From the Fraud

2005 $992,098 39% $386,918

2006 $1,284,383 51% $655,035

2007 $2,407,288 28% $674,040

2008 $3,451,947 42% $1,449,817

2009 $1,820,759 0.4% $7,283

TOTAL of 

Reyftmann’s Illgotten Gains

$3,181,068

III.

In view of the allegations made by the Division of Enforcement, the Commission deems it 

necessary and appropriate in the public interest that public administrative proceedings be instituted 

to determine:

A. Whether the allegations set forth in Section II hereof are true and, in connection 

therewith, to afford Respondent an opportunity to establish any defenses to such allegations; 

B. What, if any, remedial action is appropriate in the public interest against Respondent 

pursuant to Section 15(b) of the Exchange Act;

C. Whether, pursuant to Section 15(b) of the Exchange Act, it is appropriate and in the 

public interest to bar Respondent from participating in any offering of penny stock, including: 

acting as a promoter, finder, consultant, agent or other person who engages in activities with a 

broker, dealer, or issuer for purposes of the issuance or trading in any penny stock; or inducing or 

attempting to induce the purchase or sale of any penny stock.
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IV.

IT IS ORDERED that a public hearing for the purpose of taking evidence on the questions 

set forth in Section III hereof shall be convened at a time and place to be fixed, and before an 

Administrative Law Judge to be designated by further order as provided by Rule 110 of the 

Commission’s Rules of Practice, 17 C.F.R. § 201.110.

IT IS FURTHER ORDERED that Respondent shall file an Answer to the allegations 

contained in this Order within twenty (20) days after service of this Order, as provided by Rule 220 

of the Commission’s Rules of Practice, 17 C.F.R. § 201.220. 

If Respondent fails to file the directed answer, or fails to appear at a hearing after being duly 

notified, the Respondent may be deemed in default and the proceedings may be determined against 

him upon consideration of this Order, the allegations of which may be deemed to be true as 

provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission’s Rules of Practice, 17 C.F.R. 

§§ 201.155(a), 201.220(f), 201.221(f) and 201.310.

This Order shall be served upon Respondent as provided for in Rule 141(a)(2)(iv) of the 

Commission’s Rules of Practice, 17 C.F.R § 201.141(a)(2)(iv). 

IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an initial 

decision no later than 75 days from the occurrence of the following events, pursuant to Rule 

360(a)(2) of the Commission’s Rules of Practice: (1) the completion of post-hearing briefing in a 

proceeding where the hearing has been completed; or (2) the completion of briefing on a § 201.250 

motion in the event the hearing officer has determined that no hearing is necessary; or (3) the 

determination by the hearing officer that, pursuant to § 201.155, a party is deemed to be in default 

and no hearing is necessary.

In the absence of an appropriate waiver, no officer or employee of the Commission engaged 

in the performance of investigative or prosecuting functions in this or any factually related 

proceeding will be permitted to participate or advise in the decision of this matter, except as witness 

or counsel in proceedings held pursuant to notice. Since this proceeding is not “rule making” within 

the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the 

provisions of Section 553 delaying the effective date of any final Commission action.

By the Commission. 

Brent J. Fields

Secretary