SEC Announces Fraud Charges against Two Traders Involved in Parking Scheme

The SEC announced charges against two Wall Street traders involved in a fraudulent "parking" scheme in which one trader temporarily placed securities in the other's trading book to avoid financial penalties.

The SEC alleged that Thomas Gonnella solicited the assistance of Ryan King to evade a policy at his firm that financially penalized a trader who held securities for an extended period. Gonnella arranged for King, who worked at a different firm, to purchase several securities with the understanding that Gonnella would repurchase them at a profit for King's firm.

The SEC alleges that Gonnella intended to reset the holding period for the securities and avoid incurring any charges to his trading profits or his bonus for having aged inventory. When Gonnella's supervisor inquired about the trades, Gonnella and King allegedly took steps to evade detection and were eventually fired for misconduct by their respective firms.

See: SEC Order against Gonnella; SEC Order against King; SEC Press Release.