After completing a joint investigation, the NASD and the Chicago Stock Exchange announced on Monday that fines and suspensions were levied against two traders for allegedly artificially inflating the price of a stock.

The NASD imposed a $25,000 fine and a three-month suspension on Klaus Offenbacher, a trader with NASD-registered First Analysis Securities Corp. of Chicago. Offenbacher is receiving credit for a 60-day suspension already imposed by his employing firm. CHX imposed a $20,000 fine and a two-month suspension on Bruce Kaminski, a floor broker with Dougall & Associates of Chicago.

In settling this matter, Offenbacher neither admitted nor denied the charges, but consented to the entry of the NASD’s findings that his conduct violated NASD’s anti-fraud rule and other NASD rules. Similarly, Kaminski neither admitted nor denied the charges, but consented to the entry of the CHX’s findings that his conduct violated the CHX’s anti-fraud rule and other CHX rules.

The regulators’ joint investigation found that Offenbacher and Kaminski knowingly and intentionally artificially increased the market price of a stock in an attempt to make it appear that the purchase fell within the Securities and Exchange Commission’s safe harbour provision for issuer buy-backs.

Neither First Analysis Securities nor Dougall & Associates had knowledge that Offenbacher and Kaminski planned to artificially increase the price of MSC stock, the regulators said.

“Increasingly, trading volume is dispersed across multiple markets, with actions on each market affecting prices on the other markets,” said Thomas Gira, NASD executive vice president for market regulation. “The co-operation between the Chicago Stock Exchange and NASD on this matter demonstrates our ability and willingness to detect and investigate improper cross-market activities.”

“By working together, NASD and the Chicago Stock Exchange were able to discipline all the responsible individuals,” said CHX chief regulatory officer David Whitcomb. “This type of co-operation is essential in our increasingly connected markets.”