BROWSE BY TOPIC
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
SEC Wins Jury Trial vs. Broker Who Defrauded Customers by Churning Accounts (And Whose Partner Copped a Plea)
by Howard Haykin
Jurors in Manhattan federal court recently returned a verdict in the SEC’s favor against a broker who was charged in January 2017 with fraud for excessively trading customer accounts using a trading scheme that generated hefty commissions and significant losses for customers. A second broker, also charged in the same complaint for engaging in the same fraudulent practices, admitted to his misconduct and settled with the SEC on the eve of trial.
The SEC’s evidence at trial showed that the broker, Donald J. Fowler, while registered with J.D. Nicholas & Associates Inc., a now-defunct Syosset, NY- based broker-dealer, deployed an in-and-out trading scheme that was unsuitable for his customers in order to generate large commissions for himself. The SEC’s proof showed that the cumulative commissions Fowler charged were so high that investors would have needed to generate, on average, a 142% return simply to break even.
On June 10, the SEC obtained a final judgment against Fowler’s partner, Gregory T. Dean, who admitted, among other things, that he knowingly or recklessly made trade recommendations to his customers with no reasonable basis, and that his conduct violated the federal securities laws. In addition to admitting that his conduct violated the law, Dean agreed to pay over $558,000 in disgorgement, prejudgment interest, civil penalties. The court will determine remedies against Fowler at a later date.
FINANCIALISH TAKE AWAYS. Both Fowler and Dean left J.D. Nicholas & Associates to work for Worden Capital Management in November 2014. And to this day, they’re still associated with that broker-dealer – which, in some ways is quite impressive, if not admirable. After all, how many broker-dealers would bring on brokers who, between them, had 8 settled customer disputes and one state regulatory order on record? And how many would retain those same brokers when, within months after bringing them on, they amassed another 7 settled customer disputes? For the record:
- Before joining Worden, Dean had 2 settled customer disputes and one regulatory order; by April 2, 2015, he had settled 4 more customer disputes.
- Before joining Worden, Fowler had 6 settled customer disputes; by April 2, 2015, he had settled 3 more customer disputes.
And perhaps more impressive is the fact that Worden Capital Management and its chief executive, Jamie John Worden, each have clean CRD records - no disciplinary disclosures - despite the fact that the firm has a 1-star rating on Yelp (based on 3 reviews, for what that’s worth).