State treasurer candidate and former Tempe Mayor Hugh Hallman has released a radio ad blasting his competitors in the Republican primary race, zeroing in on the business ties of opponent Jeff DeWit.
In the ad, Hallman compares DeWit and his other GOP opponent in the three-way primary, former Arizona Republican Party Chair Randy Pullen, to Tom Cruise’s character from the movie “Risky Business.”
“What do Tom Cruise and state treasurer candidates Jeff DeWit and Randy Pullen have in common? Too much risky business,” a voice says in the ad, as the opening chords from Bob Seger’s “Old Time Rock and Roll” plays in the background.
Hallman’s ad and companion website, RiskyBusinessForAZ.com, blasts DeWit for being a “risky stock day trader” and cites ECHOtrade’s risk disclosure statement which reads: “Trading securities and options involves Substantial Risk. Day trading and other short term trading strategies are extremely risky. A person trading as a member of ECHOtrade should be prepared to lose all of his money used for trading.”
DeWit said that it was possible for ECHOtrade’s proprietary trading platform to be used for what is technically day trading — holding no financially invested position past the end of a trading day. However, many ECHOtrade traders did not follow those practices, he said, unlike what is required at exclusive day trading firms.
According to a civil complaint by the Securities and Exchange Commission, four of the eight named defendants arrested in a massive 2009 insider trading scheme were involved with DeWit’s company, ECHOtrade LLC, a proprietary off-floor trading firm, though the company itself was never implicated in any insider trading.
“None of this (insider trading) ever happened at ECHOtrade,” DeWit said. “Never was it even alleged that it happened at ECHOtrade.”
DeWit’s lawyer, Brett Johnson of the firm Snell and Wilmer, filed a request for review and removal of the ad with the radio station KFYI, claiming that some of the statements made in it are “materially false, misleading, and damaging.”
DeWit started ECHOtrade in 1999 and sold the company last September.
DeWit said only two of the defendants were associated with his company, one for little over a year and another for less than a month. The other two named in the court filings as being associated with ECHOtrade were in the process of being hired, DeWit said, but they had only had their trader credentials submitted to the regulatory agency that tracks traders when the SEC investigation was announced.
The four named in the SEC suit had come to ECHOtrade for work as a group, as frequently happens in the financial business, DeWit said. The two who were officially with the company were both fired immediately when the SEC announced the charges. The other two were also not considered for employment after the charges were announced.
Johnson wrote in an email that there were “never allegations of improprieties at Echotrade, and certainly not with (DeWit) himself.”
“The bottom-line is all traders that (DeWit) dealt with at Echotrade were licensed professionals, exchange members, and had significant background checks — including fingerprint checks by the exchanges, SEC, and FBI before beginning any relationship with Echotrade. (DeWit) and Echotrade took all reasonable steps as required by law and good business practices to ensure that Echotrade only dealt with the highest caliber of people,” Johnson wrote.
The case made national headlines and shook up the financial industry. The ringleader of the insider trading scam, Zvi Goffer, was nicknamed “the Octopussy” after a James Bond character because he had arms in so many sources of inside information, according to a 2009 criminal complaint filed in a New York federal court. Goffer and seven others — including the four with purported ties to ECHOtrade — were convicted of multiple counts of conspiracy and securities fraud in 2011, and Goffer was sentenced to a 10-year prison term.
Hallman also takes swipes at Pullen in the ad and website, saying the former Arizona Republican Party chair has a “troubling past of failed leadership.”
The website states that Pullen left the Arizona GOP $100,000 in debt, and claims the party infrastructure was “in shambles” when Pullen ended his reign in 2011.
Pullen acknowledged that the party was in debt when he left, but disputed the $100,000 figure and said any assertion that it was in shambles is simply “not true.”
“The entire team was still there in the office, working away. Everything was there, it’s not like anything was missing or gone,” he said.
The website also blasts Pullen for his business experience, and points to a 2003 article from The Arizona Republic noting that a venture-capital firm Pullen was president of had been sued several times, resulting in $1.5 million in judgments against the firm.
Pullen acknowledge that the company has been sued several times, but said that it often had nothing to do with the subsidiary he was in charge of.
“This is typical politics, he spinning facts into something that is not even close to being correct,” Pullen said.