U.S. SEC Act on Churning Brokers

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.


  • 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