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SEC chief downplays mob ties to stock trading

A day after disclosure that Wall Street's self-policing group is investigating stocks allegedly manipulated by organized crime, the nation's top securities regulator said he believed such mob penetration is "relatively limited."

Arthur Levitt Jr., chairman of the Securities and Exchange Commission, told senators Wednesday the market watchdog agency was "well aware" of some mob-related illicit activity and was making "efforts to get at it."

Levitt declined to provide specifics of those efforts during his testimony to a Senate Appropriations subcommittee, but he offered to give the panel a closed briefing on the matter at a future date.

"I believe that it's relatively limited," Levitt said, referring to infiltration of Wall Street by organized crime.

Such activities are "not as pervasive as may have been suggested," he told reporters after the hearing.

On Tuesday, the head of the National Association of Securities Dealers Inc., which owns the Nasdaq Stock Market, told Rep. John Dingell, D-Mich., that the group is investigating stocks of 19 small companies that allegedly have been manipulated by people linked to organized crime.

The self-regulatory body, known as NASD Regulation, has had "significant ongoing investigations of our own" into the companies and several allegedly mob-related brokerages, President Mary Schapiro said in a letter to Dingell, the House Commerce Committee's senior Democrat.

Last month, citing a December article in Business Week magazine, Dingell asked Schapiro, Levitt and Attorney General Janet Reno for reports on what they had done and planned to do about organized crime's alleged infiltration of the penny-stock market "while regulators and law enforcement looked the other way."

Referring to the brokerages alleged to have been taken over by mob-linked people, Levitt said Wednesday that happened because "these are very tiny firms . . . hungry for business."

Meanwhile, the president of Tampa-based Affinity Entertainment Inc., one of the 19 companies whose stock trading is being checked, said Wednesday the company has no connections to organized crime.

"Neither the company nor any of its officers, directors, employees or major shareholders have any ties with organized crime whatsoever," said William J. Bosso, president of Affinity. "The company welcomes any investigation into this matter and has and will continue to cooperate fully in all respects with all regulatory authorities."

Bosso said the publicity surrounding the Business Week report "has created the perception that Affinity itself is linked to organized crime. This perception is false and the company and its shareholders are the victims of this continued unfair publicity."

_ Times staff writer Ameet Sachdev contributed to this report.

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