Initial Decision Release No. 1370

Administrative Proceeding

File No. 3-17959

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of

Gregory Reyftmann

Initial Decision of Default

March 25, 2019

Appearances: John V. Donnelly III and Christopher R. Kelly

for the Division of Enforcement, 

Securities and Exchange Commission

Before: Cameron Elliot, Administrative Law Judge

Summary

Gregory Reyftmann, who worked for a broker-dealer, led two schemes

that defrauded investors by falsifying trade execution prices and the number 

of shares transacted. A district court imposed an injunction against 

Reyftmann as a result of his misconduct. This initial decision bars him from 

associating with any broker or dealer and from participating in an offering of 

penny stock.

Procedural Background

On May 1, 2017, the Securities and Exchange Commission issued an 

order instituting proceedings (OIP) pursuant to Section 15(b) of the 

Securities Exchange Act of 1934. The OIP alleges that the district court in 

SEC v. Leszczynski, No. 1:12-cv-7488 (S.D.N.Y.), permanently enjoined 

Reyftmann from violating the antifraud provisions of the federal securities 

laws. OIP at 3.

A different administrative law judge was originally assigned to this 

proceeding and issued an initial decision, which was declared final by the 

Commission. Gregory Reyftmann, Initial Decision Release No. 1233, 2018
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WL 722362 (ALJ Feb. 6, 2018), finality order, Exchange Act Release 

No. 83259, 2018 SEC LEXIS 1160 (May 16, 2018). The Commission vacated 

the decision and its finality order following the Supreme Court’s decision in 

Lucia v. SEC, 138 S. Ct. 2044 (2018). See Pending Admin. Proc., Securities 

Act of 1933 Release No. 10536, 2018 WL 4003609, at *1, *5 (Aug. 22, 2018). 

The matter was then reassigned to me to provide Reyftmann with the 

opportunity for a new hearing. Pending Admin. Proc., Admin. Proc. Rulings 

Release No. 5955, 2018 SEC LEXIS 2264, at *2-3 (ALJ Sept. 12, 2018). I 

have proceeded under the Commission’s instruction not to give weight to or 

otherwise presume the correctness of any prior opinions, orders, or rulings 

issued by the prior administrative law judge. Pending Admin. Proc., 2018 

WL 4003609, at *1.

Reyftmann was re-served with the order instituting proceedings on 

November 8, 2018, and his answer and proposal for the conduct of post-Lucia

proceedings were due by December 3, 2018. Gregory Reyftmann, Admin. 

Proc. Rulings Release No. 6328, 2018 SEC LEXIS 3223, at *1 (ALJ Nov. 15, 

2018). Respondent did not answer or file a proposal. I issued Respondent an 

order to show cause by December 24, 2018, but he did not respond. Gregory 

Reyftmann, Admin. Proc. Rulings Release No. 6399, 2018 SEC LEXIS 3509, 

at *1 (ALJ Dec. 13, 2018).

I therefore find Reyftmann in default and deem the allegations in the 

OIP to be true. 17 C.F.R. §§ 201.155(a)(1)-(2), .220(f); Pending Admin. Proc., 

2018 WL 4003609, at *1. This proceeding will be determined upon 

consideration of the record, which includes the deemed-true facts in the OIP 

and the twelve exhibits supporting the Division of Enforcement’s motion for 

default and sanctions against Reyftmann filed on February 13, 2019.

Findings of Fact

From February 2005 until July 2010, Reyftmann was a registered 

representative with Linkbrokers Derivatives LLC, a registered broker-dealer 

doing its principal business in New York City. OIP at 1-2; Mot. Ex. 2 at 4. 

Linkbrokers worked mostly with market counterparties and institutional 

customers dealing in equities and fixed income products. OIP at 4.

Reyftmann managed Linkbrokers’ “Cash Desk.” Id. at 4. Between 2003 

and 2009, Reyftmann obtained Series 7, 24, 55, and 63 securities licenses. 

Mot. Ex. 2 at 3; see OIP at 1.

From at least 2005 through at least February 2009, Reyftmann and 

other Linkbrokers employees working on the Cash Desk defrauded customers 

of $18.7 million by engaging in two schemes that falsified trade execution 
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prices and the number of shares transacted in over 36,000 customer 

transactions. OIP at 4, 6. Forty percent of the Cash Desk’s revenue during 

the relevant period was attributable to the fraudulent schemes. Id. at 6. 

Reyftmann led the fraud and encouraged his colleagues to participate in it. 

Id. at 4. 

The first fraudulent scheme relied on undisclosed markups and 

markdowns in trade execution prices. For example, in February 2005, a 

customer asked Reyftmann to sell short 16,000 shares of Mercury Interactive 

Corp. Id. at 5; Mot. Ex. 6. Reyftmann sold the shares at $47.639 per share 

but told the customer that the sale price was only $47.539 per share, a 

difference of ten cents. Mot. Exs. 7-8; OIP at 5. Thus, on 16,000 shares, 

Reyftmann withheld $1,600 in profit from the customer. OIP at 5; see Mot. 

Ex. 7. 

Reyftmann knew the prices reported to customers were false because he 

and his colleagues knew the prices at which the trades were actually 

executed and created the fictitious prices. OIP at 5. He also knew that the 

purpose of reporting the fictitious prices to his customers was to make a 

profit above the agreed-upon commission. Id. Persons at Linkbrokers, 

including information technology personnel, explained to Reyftmann how the 

software accommodated the fraudulent scheme. Id.; see Mot. Exs. 9-10. By 

selectively engaging in the scheme only when the volatility in the market was 

sufficient to conceal the fraud, Reyftmann further showed he was aware that 

he was defrauding customers. OIP at 5.

Reyftmann and some of his colleagues also employed a second scheme to 

defraud customers. Sometimes, when an investor made a limit order (an 

order to buy or sell a security at a certain price or better), Reyftmann told

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

piece of a profitable customer trade. Id. at 5-6. Reyftmann and his 

colleagues would execute the full limit order, but wait to report the trade to 

see if they could buy or sell the security at a better price. Id. at 6. If so, they 

would either buy back or resell shares at the lower or higher price, 

respectively, and pretend that those shares had never been sold. Id.

For example, in April 2007, Linkbrokers sold 22,576 shares of 

Qualcomm, Inc., at a customer’s direction for an average share price of 

$45.75. Id. But less than an hour later, Linkbrokers bought back 3,000 

shares for an average price of $45.35 and told the customer it was only able to 

sell 19,576 shares at the price the customer wanted. Id. Linkbrokers kept 

the approximately $1,200 profit from the 3,000 shares for itself. Id. 

Reyftmann and his associates knew that when they told customers that they 

were unable to fully execute the customers’ orders, it was untrue. Id.
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Reyftmann’s compensation from Linkbrokers was directly tied to the 

Cash Desk’s gross revenue. Id. at 7. He received bonuses because of the 

fraudulent schemes he ran. Id. Reyftmann’s ill-gotten gains—that is, the 

portion of his bonus attributable to the fraudulent schemes—totaled 

$3,181,068, from 2005 through 2009. Id.; Mot. Ex. 12 at 3.

On February 9, 2015, the United States District Court for the Southern 

District of New York entered a final judgment by default in the civil action. 

OIP at 3; Ex. 1. The court enjoined Reyftmann 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 ordered Reyftmann to disgorge $3,181,068 

together with prejudgment interest of $989,072 and to pay a civil penalty of 

$4,555,000. OIP at 3; Ex. 1 at 2-3.

Conclusions of Law

Exchange Act Section 15(b)(6) authorizes the Commission to impose a 

bar on Respondent if: (1) at the time of the alleged misconduct, he was

associated with a broker or dealer; (2) he has been enjoined from “conduct . . . 

in connection with the purchase or sale of any security”; and (3) the sanction 

is in the public interest. 15 U.S.C. § 78o(b)(4)(C), (b)(6)(A)(iii).

Reyftmann was enjoined and was associated with a broker-dealer

Reyftmann was associated with Linkbrokers, a registered broker-dealer, 

throughout the period of his misconduct. OIP at 1, 4. And Respondent was

permanently enjoined from conduct in connection with the purchase or sale of 

any security by the district court’s injunction against violating the antifraud 

provisions of the Securities Act and the Exchange Act. 15 U.S.C. 

§ 78o(b)(4)(C); OIP at 3; Mot. Ex. 1 at 2-3.

Broker-dealer and penny stock bars are in the public interest

The appropriateness of any remedial sanction in this proceeding is 

guided by the public interest factors set forth in Steadman v. SEC, namely: 

the egregiousness of the respondent’s actions; the isolated or recurrent nature 

of the infraction; the degree of scienter involved; the sincerity of the 

respondent’s assurances against future violations; the respondent’s 

recognition of the wrongful nature of his conduct; and the likelihood that the 

respondent’s occupation will present opportunities for future violations. 603 

F.2d 1126, 1140 (5th Cir. 1979), aff’d on other grounds, 450 U.S. 91 (1981); 

see Gary M. Kornman, Exchange Act Release No. 59403, 2009 WL 367635, at 

*6 (Feb. 13, 2009), pet. denied, 592 F.3d 173 (D.C. Cir. 2010).
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The public interest analysis is a “flexible” inquiry, and “no one factor is 

dispositive.” Kornman, 2009 WL 367635 at *6 (quoting David Henry Disraeli, 

Exchange Act Release No. 57027, 2007 WL 5479036, at *15 (Dec. 21, 2007), 

pet. denied, 334 F. App’x 334 (D.C. Cir. 2009)). The Commission has also 

considered the age of the violation, the degree of harm to investors and the 

marketplace resulting from the violation, and the deterrent effect of 

administrative sanctions. See Schield Mgmt. Co., Exchange Act Release 

No. 53201, 2006 WL 231642, at *8 & n.46 (Jan. 31, 2006); Marshall E. 

Melton, Exchange Act Release No. 48228, 2003 WL 21729839, at *2 (July 25, 

2003). I have determined that it is appropriate and in the public interest to 

impose a broker-dealer and penny stock bar on Respondent.

Types of available industry bars

Reyftmann’s association with a broker-dealer and fraudulent activities

concluded before the July 22, 2010, effective date of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 

1376 (2010). At that time, Exchange Act Section 15(b)(6), under which this 

proceeding was brought, permitted a respondent to be barred from 

association with a broker or dealer, but did not permit a respondent to be 

collaterally barred from all related industries. As such, I cannot impose a full 

collateral bar in this proceeding. See SEC v. Bartko, 845 F.3d 1217, 1224-26 

(D.C. Cir. 2017) (holding that the Commission could not apply a collateral bar 

based on conduct that predated Dodd-Frank without making the industryspecific findings that were required under earlier statutory language). 

However, even though Reyftmann’s misconduct did not involve penny 

stocks, I am permitted to impose a penny stock bar on him as requested by 

the Division. See Mot. at 10. Unlike the other industries covered by the 

collateral bar, the penny stock bar has been part of Section 15(b)(6) since 

1990. See Securities Enforcement Remedies and Penny Stock Reform Act of 

1990, Pub. L. No. 101-429, § 504, 104 Stat. 931, 952-53 (1990). The plain 

language of the 1990 amendment remains fundamentally unchanged through 

the present, and there is no indication that Bartko limited the availability of 

the penny stock bar. See Bartko, 845 F.3d at 1225-26 (explaining that preDodd-Frank, industry bars for broker-dealers, municipal securities dealers, 

transfer agents, and investment advisers were contained in four separate 

provisions of the Exchange Act and the Investment Advisers Act of 1940 

without references to each other). 

Public interest analysis

Turning to the public interest factors, Reyftmann’s conduct was 

egregious and recurrent. The Commission considers misconduct involving 
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fraud to be particularly egregious and requiring a severe sanction. See Peter 

Siris, Exchange Act Release No. 71068, 2013 WL 6528874, at *6 (Dec. 12, 

2013) (stating that the Commission has “repeatedly held that ‘conduct that 

violates the antifraud provisions of the securities laws is especially serious 

and subject to the severest of sanctions under the securities laws’” (quoting 

Vladimir Boris Bugarski, Exchange Act Release No. 66842, 2012 WL 

1377357, at *5 (Apr. 20, 2012))), pet. denied, 773 F.3d 89 (D.C. Cir. 2014). 

Where a respondent has been enjoined from violating antifraud provisions of 

the securities laws, the Commission “typically” imposes a permanent bar. 

Toby G. Scammell, Advisers Act Release No. 3961, 2014 WL 5493265, at *8 

(Oct. 29, 2014).

Using two fraudulent schemes over five years, Reyftmann and 

Linkbrokers received $18.7 million in fraudulent profits. OIP at 6. As noted, 

in one transaction alone, a customer lost $1,600 because Reyftmann lied 

about the sale price. Id. at 5; Mot. Exs. 6-8. In other transactions, 

Linkbrokers employees, at Reyftmann’s direction, falsely told customers that 

they could only execute a portion of their limit orders when in fact 

Linkbrokers was pocketing a hidden profit from executing the entire order. 

OIP at 6. These schemes lasted years and involved over 36,000 transactions;

Reyftmann personally received $3,181,068 in bonuses due to the frauds. OIP 

at 6-7. And Reyftmann did not just defraud customers on his own, but he 

encouraged his colleagues to join in the schemes. Id. at 4. Reyftmann’s 

conduct seriously harmed investors and the marketplace.

Reyftmann showed a high degree of scienter because he knowingly 

created false prices for his customers in his markup-and-markdown scheme, 

and knowingly misstated the number of shares Linkbrokers was able to buy 

or sell in his limit-order scheme. OIP at 5-6. Regarding the first scheme, he 

also misrepresented the price that he and other employees paid to buy or sell 

stock only when there was sufficient volatility in the market that customers 

would not be able to tell that they were being defrauded, which shows 

scienter. Id. at 5. And Reyftmann understood that the company’s software 

supported the fraud. Id.; Mot. Exs. 9-10. Moreover, the district court 

enjoined Reyftmann from violating Section 10(b) and Rule 10b-5—provisions 

which require a finding of scienter. OIP at 3; Mot. Ex. 1 at 2; Aaron v. SEC, 

446 U.S. 680, 695 (1980).

Reyftmann has not participated in this proceeding to acknowledge the 

wrongfulness of his conduct or to make assurances against future violations. 

Although the mere existence of a past violation is not sufficient to justify 

sanctions, past conduct is evidence in a “broader inquiry into whether a 

person presents a future risk to the public.” Tzemach David Netzer Korem, 

Exchange Act Release No. 70044, 2013 WL 3864511, at *6 n.50 (July 26, 
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2013) (quoting John W. Lawton, Advisers Act Release No. 3513, 2012 WL 

6208750, at *9 (Dec. 13, 2012), vacated in part on other grounds by Advisers 

Act Release No. 4402, 2016 WL 3030847 (May 27, 2016)). “[A]s the Supreme 

Court has recognized, the ‘degree of intentional wrongdoing evident in a 

defendant’s past conduct’ is an important indication of the defendant’s 

propensity to subject the trading public to future harm.” Lawton, 2012 WL 

6208750, at *9 (quoting Aaron, 446 U.S. at 701). Because Respondent is not 

incarcerated and has made no assurances about the legality of his future 

conduct, there is every reason to believe he could continue to put investors at 

risk. See Reyftmann, 2018 SEC LEXIS 3223, at *1 (finding service on 

Respondent at his address in France).

Weighing all the factors, there is substantial need to protect investors 

from Respondent and deter others from engaging in similar conduct. 

Associational bars have long been considered effective deterrence. See Guy P. 

Riordan, Securities Act Release No. 9085, 2009 WL 4731397, at *19 & n.107 

(Dec. 11, 2009) (collecting cases), pet. denied, 627 F.3d 1230 (D.C. Cir. 2010).

Even though Reyftmann’s misconduct ended a decade ago, it was sufficiently 

egregious as to warrant a bar now. A broker-dealer and penny stock bar “will 

prevent [Respondent] from putting investors at further risk and serve as a 

deterrent to others from engaging in similar misconduct.” Montford & Co., 

Advisers Act Release No. 3829, 2014 WL 1744130, at *20 (May 2, 2014), pet. 

denied, 793 F.3d 76 (D.C. Cir. 2015).

Order

The Division of Enforcement’s motion for default and sanctions is 

GRANTED.

It is ORDERED that, pursuant to Section 15(b)(6) of the Securities 

Exchange Act of 1934, Gregory Reyftmann is BARRED from association with 

any broker or dealer and from participating in an offering of penny stock.

This initial decision shall become effective in accordance with and 

subject to the provisions of Rule 360. See 17 C.F.R. § 201.360. Pursuant to 

that Rule, a party may file a petition for review of this initial decision within 

twenty-one days after service of the initial decision. A party may also file a 

motion to correct a manifest error of fact within ten days of the initial 

decision, pursuant to Rule 111. See 17 C.F.R. § 201.111. If a motion to 

correct a manifest error of fact is filed, then any party shall have twenty-one 

days to file a petition for review from the date of the undersigned’s order 

resolving such motion to correct a manifest error of fact.
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The initial decision will not become final until the Commission enters an 

order of finality. 17 C.F.R. § 201.360(d). The Commission will enter an order 

of finality unless a party files a petition for review or motion to correct a 

manifest error of fact or the Commission determines on its own initiative to 

review the initial decision as to a party. If any of these events occurs, the 

initial decision shall not become final as to that party.

Respondent may move to set aside the default in this case. Rule 155(b) 

permits the Commission, at any time, to set aside a default for good cause, in 

order to prevent injustice and on such conditions as may be appropriate. 17 

C.F.R. § 201.155(b). A motion to set aside a default shall be made within a 

reasonable time, state the reasons for the failure to appear or defend, and 

specify the nature of the proposed defense in the proceeding. Id.

_______________________________

Cameron Elliot

Administrative Law Judge