Alexander Capital LP Named in the Complaint
According to a press announcement on September 28, 2017, the Securities and Exchange Commission charged three New York-based brokers with making unsuitable recommendations in order to earn large commissions. The recommendations reportedly resulted in substantial losses to their customers. One of the brokers agreed to pay more than $400,000 to settle the charges.
An SEC examination of the firm Alexander Capital L.P. detected potential misconduct among certain brokers. The ensuing investigation has led to the filing of an SEC complaint against William C. Gennity and Rocco Roveccio. Laurence M. Torres was also charged.
The SEC’s complaint alleges that Gennity and Roveccio recommended investments that involved frequent buying and selling of securities. These recommendations reportedly had no reasonable basis to profit their customers.
The SEC further alleges that Gennity and Roveccio churned customer accounts, engaged in unauthorized trading, and concealed material information from their customers. Customers were reportedly not told that the transaction costs associated with their recommendations (commissions, markups, markdowns, postage, fees, and margin interest) would almost certainly outstrip any potential monetary gains in the accounts.
According to the SEC’s complaint, customer losses totaled $683,038 while Gennity and Roveccio received approximately $280,000 and $206,000, respectively, in commissions and fees.
The SEC’s order against Torres alleged that he had no reasonable basis to believe it was suitable to recommend a high-cost pattern of frequent trading that gave his customers virtually no chance of making even a minimal profit. Torres also allegedly engaged in churning and made unauthorized trades.
Torres agreed to be barred from the securities industry, without admitting or denying the findings. He must pay $225,359.36 in disgorgement plus $25,748.02 in interest, and a $160,000 penalty.
The SEC’s litigation against Gennity and Roveccio will proceed in federal district court in Manhattan, with the complaint charging them with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
Brokers must make recommendations that are compatible with their customers’ financial needs, investment objectives, and risk tolerances. Net worth, age, and liquidity needs also need to be considered. Furthermore, brokers are prohibited from engaging in underhanded businesses practice, like churning or unauthorized trading, that violate securities laws and regulations.
When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
If you have suffered losses due to underhanded business practices the attorneys of The White Law Group may be able to help you recover your losses. For a free consultation with a securities attorney, please call 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
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