John Amore, the man federal prosecutors believe helped orchestrate the "squawk box" trading-tips scandal, rarely rests.
As recently as April, Amore was trying to round up subscribers for a Web-based venture that would enable traders to place highly leveraged bets on stocks through a small offshore brokerage that's not registered to sell securities in the U.S., sources say.
Amore, most recently, was pitching the services of
North End Management
to a group of daytraders in Wilkes-Barre, Pa., a source says. Those talks, however, abruptly ended after Amore's name surfaced four months ago in connection with the probe of squawk box eavesdropping.
The Web site for North End was disabled four days ago, after
began making inquiries about it.
Amore, indicted by federal prosecutors nearly a year ago on an unrelated securities offense, did not return several phone calls. His lawyer, Nelson Boxer, declined to comment. Federal prosecutors in the Eastern District of New York, who are overseeing the squawk box investigation, also declined to comment.
Amore's activities are puzzling, given that he's believed to be a cooperating witness in the squawk box investigation. People familiar with the investigation say Amore began working with prosecutors last summer, around the time he was indicted on charges of defrauding investors in a small hedge fund he once managed,
Amore Capital Group
With Amore's cooperation, prosecutors identified a number of brokers at
who allegedly permitted daytraders at
to listen in to the internal squawk box systems of those securities firms. The eavesdropping allegedly allowed the traders to get valuable information about big block trades by institutional customers.
Prosecutors in New York contend the daytraders used the squawk boxes to gather information to engage in front-running, an illegal practice in which a person buys or sells shares ahead of a trade he suspects will move a stock's price. In return for the access, the daytraders allegedly compensated the brokers.
When he was the chief executive of Watley, Amore allegedly negotiated the deals with the brokers to secure the squawk box access, people say.
In recent weeks, the pace of the investigation, which also involves the
Securities and Exchange Commission
, has quickened. Last month, a former senior compliance manager at Merrill Lynch pleaded guilty to a witness-tampering charge in connection with the probe.
Watley disclosed late Tuesday that the SEC recently indicated that it is considering filing a civil action against the firm over its role in the squawk box investigation. Watley's attorney, Jerry Bernstein, a partner with Blank Rome, said the firm is cooperating with the SEC and the U.S. attorney's office.
Amore's involvement with North End, however, could throw a new wrinkle into the investigation.
Before the Web site was disabled, it described the firm as "an investment partnership based in Anguilla," an island in the British West Indies. The administrative contact for North End, according to Internet domain registration company
, is a "J. Amore" of Middletown, N.J.
On its Web site, North End also claimed to have a relationship with
, an Anguilla-based brokerage. In fact, North End and Global Trading both share the same telephone and fax number in Anguilla.
Through its relationship with Global Trading, North End said that daytraders would be able to trade U.S. stocks, as well as stocks on "18 of the world's major stock exchanges."
Better yet, North End bragged, daytraders could use specialized derivatives called "contracts for difference" that enable an investor to buy a stock by putting down as little as 10% of the purchase price. In other words, a CFD enables a trader to purchase a stock almost fully on margin, or with borrowed money.
CFDs have become popular in recent years with fast-fingered traders in Europe. But they aren't sold in the U.S. and are considered too risky by many traders.
It's not clear, however, whether Amore would have been able to deliver on North End's promise of "matching the best traders' performance with capital."
That's because Global Trading is not registered to trade securities in the U.S., according to the NASD.
John Dyrud, an Anguilla attorney who is listed as a contact person for Global Trading, declined to comment, saying he would have to first "talk to his principals." He later directed a person named Dermel Franklin to speak for the brokerage.
Franklin, who identified himself as an intern with Global Trading, said the brokerage permits only U.S. residents to trade foreign currencies. Franklin also said in an email response that "Amore is not affiliated with Global Trading."
In a phone call, Franklin declined to answer any questions about North End. He also said Global Trading's manager, Pauline Smith, would not be available to comment for at least a week. He said he was the only person in the office.