On December 6, SEC issued penalty on brokers for unsuitable churning.
- Zachary Berkey and Daniel Fischer, were brokers at Five Points Capital Partners.
- Defendants churned accounts, and hid material information from the customers.
- Unsuitable recommendations and siphoning money by high commissions, costs.
Alleged Violations
- Defendants made lucrative trades for themselves, at expense of their customers.
- Customers incurred significant cost with every trade, securities were held briefly.
- Price of securities had to rise significantly, for customers got even minimal profit.
- Firm made in-and-out trades, that were almost certain to lose customers' money.
- 10 customers lost $573k and defendants received $106k and $175k, respectively.
- Fischer engaged in unauthorized trading.
Enforcement
- Fischer was ordered to return ill-gotten gains, interest and pay $160k in penalty.
- Order barred Fischer from the securities industry, and from penny stock trading.
- Ongoing litigation against Berkey, proceeding in Manhattan federal district court.
- Follows action on brokers in Jan., Apr., Sep. 2017, investor alert re excess trading
