UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 9988 / December 11, 2015

SECURITIES EXCHANGE ACT OF 1934

Release No. 76628 / December 11, 2015

INVESTMENT COMPANY ACT OF 1940

Release No. 31934 / December 11, 2015

ADMINISTRATIVE PROCEEDING

File No. 3-16999

In the Matter of

AARON NOWAK

Respondent.

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTION 8A OF THE 

SECURITIES ACT OF 1933, SECTION 15(b) 

OF THE SECURITIES EXCHANGE ACT OF 

1934, AND SECTION 9(b) OF THE 

INVESTMENT COMPANY ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASEAND-DESIST ORDER 

I.

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

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Section 15(b) of 

the Securities Exchange Act of 1934 (“Exchange Act”), and Section 9(b) of the Investment 

Company Act of 1940 (“Investment Company Act”) against Aaron Nowak (“Respondent”). 

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings

herein, except as to the Commission’s jurisdiction over him and the subject matter of these 

proceedings, which are admitted, and except as provided herein in Section V, Respondent consents 

to the entry of this Order Instituting Administrative And Cease-And-Desist Proceedings, Pursuant 
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to Section 8A of the Securities Act of 1933, Section 15(b) of the Securities Exchange Act of 1934, 

and Section 9(b) of the Investment Company Act of 1940, Making Findings, and Imposing 

Remedial Sanctions and a Cease-and-Desist (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1that:

Summary

These proceedings arise out of Aaron Nowak’s negligent participation in a fraudulent 

scheme perpetrated by certain employees at Linkbrokers Derivatives LLC (“Linkbrokers”), a New 

York based interdealer broker, to unlawfully take secret profits of more than $18 million at the 

expense of Linkbrokers’ customers. Aaron Nowak and four other individuals (collectively “the 

Linkbrokers Team”) worked on Linkbrokers’ “Cash Desk,” executing orders to purchase and sell 

securities on behalf of their customers, primarily large foreign institutions and foreign banks, and 

purportedly charging small commissions—typically between a fraction of a penny and two pennies 

per share.2 

Typically, the Cash Desk executed trades for Linkbrokers’ customers on a “riskless 

principal” basis. That is, the customer gave the Cash Desk the order, the order was filled in the 

market under Linkbrokers’ name, then allocated to the customer. Thus, typically, Linkbrokers 

facilitated the transactions in exchange for the agreed-upon commission, and, essentially, served as 

an intermediary for others who assumed the market risk.

From at least 2005 through at least February 2009 (the “relevant period”), on over 36,000 

customer transactions, the Linkbrokers Team perpetrated the scheme by charging customers false 

prices with embedded hidden markups or markdowns. In total, the sales brokers selectively 

engaged in the scheme when the volatility in the market was sufficient to conceal the fraud from the 

customer. 

After receiving and executing orders on behalf of customers, the sales brokers routinely 

evaluated each transaction to determine whether they could make an additional or “secret” profit

above the commission to be charged to the customer. The sales brokers considered other 

transactions in the relevant security occurring in the seconds to minutes before and after the actual 

trade was executed. Where the price fluctuated sufficiently to conceal the fraud from customers, a 

sales broker instructed Nowak or another sales trader to record, on Linkbrokers’ internal records, a 

false execution price that included a secret profit. Then, Linkbrokers charged the customer the 

 

1

The findings herein are made pursuant to Respondent's Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 

2 Gregory Reyftmann, Benjamin Chouchane and Marek Leszczynski were “sales brokers” 

and Aaron Nowak and Henry Condron were “sales traders” on the Linkbrokers Team.
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inflated price while also charging the agreed-upon commission. In that way, Linkbrokers received 

not only the actual commission charged, but also the fraudulent secret profit that the sales broker, 

with assistance from Nowak on certain occasions, embedded in the price reported to the customer. 

In total, the Linkbrokers Team fraudulently over-charged customers by $18 million, representing 

approximately 40% of the Cash Desk’s earnings during the relevant time period.

Respondent

1. Aaron Nowak, is a registered representative and has been associated with brokerdealers registered with the Commission from November 2004 until the present. Nowak was 

associated with Linkbrokers from November 2004 until April 2011 as a sales trader and middleoffice assistant. In April 2011, he transferred to a new position at ICAP. He holds Series 7, 55 

and 63 securities licenses. Nowak, 36 years old, is a resident of Greenwood Lake, New York.

Other Relevant Entities and Individuals

2. Linkbrokers was a Delaware limited liability company. During the relevant 

period, Linkbrokers’ principal place of business was in New York, New York. It was registered 

with the Commission as a broker-dealer from 2003 until 2014. Linkbrokers ceased acting as a 

broker-dealer in April 2013 and withdrew its broker-dealer registration in November 2014. In 

the related administrative proceeding In the Matter of Linkbrokers Derivatives LLC, File No. 3-

16017 (Aug. 14, 2014), Linkbrokers was ordered to pay disgorgement of $14 million.

3. Gregory Reyftmann (“Reyftmann”), age 41, was a sales broker and supervisor at 

Linkbrokers from February 2005 until June 2010. During that period, Reyftmann was the head 

of the Cash Desk and responsible for supervising Chouchane, Leszczynski, Condron, and others. 

He was a defendant in the related case SEC v. Leszczynski, et al., No. 12-cv-07488 (S.D.N.Y.), 

and on February 9, 2015, he was ordered to pay disgorgement, prejudgment interest and penalty 

totaling $8,720,140. 

4. Benjamin Chouchane (“Chouchane”), age 41, was a sales broker at Linkbrokers 

from February 2005 until December 2010. 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.). He 

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

pay $5 million in restitution. In addition, he was a defendant in the related case SEC v. 

Leszczynski, et al., Civil Action No. 12-cv-07488 (S.D.N.Y.). He consented to a judgment 

entered on January 13, 2014, ordering him to pay disgorgement and prejudgment interest totaling 

$2,449,577. In the related administrative proceeding, In the Matter of Benjamin Chouchane, File 

No. 3-15739 (Feb. 4, 2014), Chouchane was barred, by consent, from association with any 

broker, dealer, investment adviser, municipal securities dealer, or transfer agent and from 

participating in any penny stock offering. 

5. Marek Leszczynski (“Leszczynski”), age 45, was a sales broker at Linkbrokers 

from March 2005 until December 2010. He pled guilty in a criminal case arising from the same 
4

conduct discussed herein, United States v. Leszczynski, No. 12-cr-00923 (S.D.N.Y.). He was 

sentenced to eighteen months imprisonment, two years supervised release, and ordered to pay 

$1.5 million in restitution. In addition, he was a defendant in the related case SEC v. 

Leszczynski, et al., Civil Action No. 12-cv-07488 (S.D.N.Y.). He consented to a judgment 

entered on January 13, 2014, ordering him to pay disgorgement of $1,500,000. In the related 

administrative proceeding, In the Matter of Marek Leszczynski, File No. 3-15738 (Feb. 4, 2014), 

Leszczynski was barred, by consent, from association with any broker, dealer, investment 

adviser, municipal securities dealer, or transfer agent and from participating in any penny stock 

offering.

6. Henry A. Condron (“Condron”), age 36, was a sales trader and middle-office 

assistant at Linkbrokers from February 2005 until October 2010. 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.). He was sentenced to eighteen months probation and ordered to pay $207,675 in 

restitution. In addition, he was a defendant in the related case SEC v. Leszczynski, et al., Civil 

Action No. 12-cv-07488 (S.D.N.Y.). He consented to a judgment entered on January 13, 2014, 

ordering him to pay disgorgement and prejudgment interest totaling $207,675. In the related 

administrative proceeding, In the Matter of Henry A. Condron, File No. 3-15740 (Feb. 4, 2014), 

Condron was barred, by consent, from association with any broker, dealer, investment adviser, 

municipal securities dealer, or transfer agent and from participating in any penny stock offering. 

Facts

7. During the relevant time period, Linkbrokers acted as an interdealer broker for 

institutional customers dealing in equities products, both cash and derivatives. 

8. Linkbrokers established its Cash Desk in February 2005. The Cash Desk 

executed trades in U.S. and Canadian stocks. Its customers were primarily large foreign 

institutions and foreign banks. Typically, Linkbrokers operated as an agent and executed large 

volumes of securities trades on behalf of customers for low commissions. The Cash Desk 

typically did not hold any securities itself. The Cash Desk was one of several desks at 

Linkbrokers.

9. Linkbrokers marketed and advertised itself as an agency-only business. For 

example, in marketing materials distributed on March 8, 2007, Linkbrokers represented that 

“Link acts as a fiduciary in all transactions. Link trades on an agency basis in transactions with 

the sole purpose of providing best execution.” In separate marketing materials distributed on 

January 4, 2007, Linkbrokers further stated that it provided “unparalleled execution without the 

conflicts of investment banking and proprietary trading.” 

10. Linkbrokers’ internal records show that, for the majority of its customers, the 

Cash Desk was to charge its customers flat commission rates between $0.005 per share and 

$0.02 per share. 
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11. Reyftmann, Chouchane and Leszczynski were “sales brokers” on the Cash Desk 

and were responsible for finding customers, developing relationships, negotiating commission 

rates, taking orders from customers, and communicating with customers regarding their orders 

and Linkbrokers’ execution of those orders. Reyftmann also supervised the Cash Desk during 

the relevant period. 

12. Nowak and Condron were “sales traders” on the Cash Desk who entered orders 

they received from the sales brokers into systems for execution, and worked at the direction of 

Reyftmann. 

13. Nowak and Condron also served as “middle-office assistants,” who maintained 

and updated Linkbrokers’ internal “trade blotter” (hereafter “Trade Blotter”), a spreadsheet 

generated from Linkbrokers’ proprietary software program that contained detailed information 

about trades executed by the Linkbrokers Team, including the names of the customers and 

execution prices. The Trade Blotter contained three price fields: (1) the actual “execution price” 

received by Linkbrokers; (2) the “gross price” – the price that included the undisclosed 

markup/markdown; and (3) the “net price” – the gross price plus the agreed-upon commission 

rate. The Linkbrokers Team used the Trade Blotter to record profits from the unlawful scheme.

14. In addition, as middle-office assistants, Nowak and Condron reported customer 

trades to Linkbrokers’ clearing firm (either through a transfer via Linkbrokers’ proprietary 

software program or directly), reviewed trade settlements by the clearing firm, calculated daily 

profit and loss, and sent trade recaps and/or trade confirmations via email to customers. 

15. Depending on the customer’s preference, Linkbrokers, through Reyftmann, 

Chouchane and Leszczynski, accepted customer orders by telephone, instant message, or email. 

Nowak or other members of the Linkbrokers Team also confirmed trades to customers by 

telephone, instant message, email or mail, depending on the customer’s preference. 

The Undisclosed Markups/Markdowns

16. Members of the Linkbrokers Team concealed the markups/markdowns from 

Linkbrokers’ customers by, among other things, misrepresenting execution prices to the 

customers, and omitting information relating to markups/markdowns. 

17. The sales brokers opportunistically engaged in adding undisclosed 

markups/markdowns to trades when they thought the particular customer would not detect it, 

frequently taking advantage of market volatility to conceal the conduct.

18. The undisclosed markups/markdowns ranged anywhere from a few dollars to 

$228,822 per transaction. 

19. The markup/markdown scheme worked in the following way: 
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a. A sales broker received a customer order either by telephone, instant message, 

or email. 

b. The sales broker gave the order to a sales trader to execute. 

c. The sales trader executed the trade. 

d. After the order was executed, a middle-office assistant recorded the actual 

execution price on the Trade Blotter and informed the sales broker of the 

execution. 

e. Shortly after the trade was executed, the sales broker examined other market 

executions in or around the time of the actual execution, to determine whether 

the stock price fluctuated. If the stock price’s fluctuation was favorable to 

Linkbrokers and sufficient to conceal the fraud from Linkbrokers’ customer, 

the sales broker instructed the middle-office assistant to record a false 

execution price in the gross price field on their internal Trade Blotter. 

f. A member of the Linkbrokers Team reported the false execution price and the 

commission to the customer, and recorded the total charged to the customer in 

the net price field on their internal Trade Blotter.

20. Frequently, Nowak or other members of the Linkbrokers Team provided the false 

and/or misleading information through trade recaps communicated to customers by telephone, 

instant message, or email. The Linkbrokers Team also sent, or caused to be sent, trade 

confirmations containing the false and/or misleading information to some customers.

Example Of A Markup/Markdown

21. On September 29, 2008 at 3:54 p.m., a customer placed an order by telephone 

with Leszczynski to sell 90,000 shares of Citigroup, Inc. (“C”). Linkbrokers executed the trade 

at 3:56 p.m., selling 90,000 shares of C on the customer’s behalf at an average price of $19.1311 

per share. The Trade Blotter reflects an execution price of $19.1311, a gross price of $17.7500, 

and a net price of $17.7435. At 5:01 p.m., Nowak generated, and emailed to the customer, a 

trade confirmation containing the false execution price of $17.7500 per share. The commission 

for this transaction was $0.0065 per share, resulting in a total commission of $585 for the trade, 

which Linkbrokers charged and disclosed to the customer. However, Linkbrokers, and the 

Linkbrokers Team, failed to disclose that the actual execute price was $124,299 higher than the 

execution price reported to the customer, thereby taking this undisclosed profit for Linkbrokers 

at the expense of its customer. 
7

Nowak Was Negligent

22. Nowak, through emailed trade recaps and trade confirmations sent to customers, 

caused the disclosure of false execution prices and inaccurate fees charged to customers. 

23. Nowak was negligent in that he should have known that the confirmations sent to 

customers contained false and/or misleading information and omitted the markups/markdowns. 

Nowak received the false prices from the sales brokers and input them into Linkbrokers’ internal 

database and then generated the confirmations or emailed the trade recaps that contained the 

false prices and omitted the markups/markdowns. 

Violation

24. As a result of the negligent conduct described above, Nowak willfully3violated 

Sections 17(a)(2) and (3) of the Securities Act, which prohibit fraudulent conduct in the offer or 

sale of securities and in connection with the purchase or sale of securities.

IV.

In view of the foregoing, the Commission deems it appropriate, in the public interest, to 

impose the sanctions agreed to in Respondent Nowak’s Offer.

Accordingly, pursuant to Section 8A of the Securities Act, Section 15(b) of the Exchange 

Act, and Section 9(b) of the Investment Company Act, it is hereby ORDERED that:

A. Respondent Nowak cease and desist from committing or causing any violations and 

any future violations of Section 17(a)(2) and (3) of the Securities Act. 

B. Respondent Nowak be, and hereby is:

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

 

3 The use of the word “willful” does not reflect a finding that the actor intended to violate 

the law or knew that he was doing so. A willful violation of the securities laws means merely 

“‘that the person charged with the duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 

408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). There 

is no requirement that the actor “‘also be aware that he is violating one of the Rules or Acts.’” 

Id. (quoting Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)).
8

barred from participating in any offering of a 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,

with the right to apply for reentry after three (3) years to the appropriate selfregulatory organization, or if there is none, to the Commission.

C. Any reapplication for association by the Respondent will be subject to the 

applicable laws and regulations governing the reentry process, and reentry may be conditioned 

upon a number of factors, including, but not limited to, the satisfaction of any or all of the 

following: (a) any disgorgement ordered against the Respondent, whether or not the 

Commission has fully or partially waived payment of such disgorgement; (b) any arbitration 

award related to the conduct that served as the basis for the Commission order; (c) any selfregulatory organization arbitration award to a customer, whether or not related to the conduct 

that served as the basis for the Commission order; and (d) any restitution order by a selfregulatory organization, whether or not related to the conduct that served as the basis for the 

Commission order.

D. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $5,000 to the Securities and Exchange Commission. If timely payment 

is not made, additional interest shall accrue pursuant to 31 U.S.C. 3717. Payment must be made 

in one of the following ways: 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request; 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying 

Aaron Nowak as a Respondent in these proceedings, and the file number of these proceedings; a 
9

copy of the cover letter and check or money order must be sent to G. Jeffrey Boujoukos, Associate 

Regional Director, Division of Enforcement, Securities and Exchange Commission, One Penn 

Center, 1617 JFK Boulevard, Suite 520, Philadelphia, PA 19103. 

E. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, a Fair 

Fund is created for the penalty referenced in paragraph D above. This Fair Fund shall be transferred 

to the related matter In the Matter of Linkbrokers Derivatives LLC, File No. 3-16017 (Aug. 14, 

2014), and combined with the funds previously collected in that matter and distributed in 

accordance with the proposed distribution plan in that matter pursuant to Commission Rule 

1101(a). Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 

the Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” 

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding.

V.

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 

Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 

amounts due by Respondent under this Order or any other judgment, order, consent order, decree 

or settlement agreement entered in connection with this proceeding, is a debt for the violation by 

Respondent of the federal securities laws or any regulation or order issued under such laws, as set 

forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19).

By the Commission.

Brent J. Fields

Secretary