Securities Arbitration Lawyers BlogNew York City Broker Accused of Churning
The U.S. Securities and Exchange Commission has accused Emil Botvinnik of taking $3.7 million in a fraudulent scheme involving excessive, high-frequency trading. On November 7, 2018, he asked a New York federal judge to toss the suit because he claimed its allegations do not meet the pleading standard for fraud.
The claims against Botvinnik state that he wrongfully used his clients’ accounts while he was employed at Meyers Associates LP. However, Botvinnik denies these claims and he stated that there are no specific allegations that proves his clients were the type of unsophisticated investors who would not benefit from high-frequency trading. He also stated that his clients may only have been simply unaware of the trading strategy and its risks.
The SEC said that from June 2012 until November 2014, Botvinnik solicited five customers to open securities trading accounts for which he claimed he would employ a profitable trading strategy. He then implemented the strategy of frequent, short-term trades that forced significant costs and commissions on the investors. For example, the accounts would have had to reach an annual return of between 31 and 150 percent just to pay off the transaction costs that built up from the trading strategy. This type of trading is frequently referred to as churning.
GPB announced in August that they would cease finding new investment money in order to focus on compliance and straightening out their accounting and financial statements for their two biggest funds. The SEC is, according to one executive, interested in seeing how accurate GPB’s disclosures are that were given to investors. The SEC also wants to review fund performances and distribution of the company’s capital to their investors, as well as broker-dealers who sold these private placements to investors.
White was discharged from the Raymond James Financial Services on 4/3/2017 after it was discovered he had accepted cash gifts from a customer, and failed to disclose the gift to the firm. The firm’s policies prohibited registered representatives from accepting gifts over $100 per year from the firm’s customers. White accepted a total of $58,000 from a single firm customer, after certifying that he understood the policies on annual compliance questionnaires.
FINRA recently barred Kurtz “indefinitely,” effective 12/3/2018, after he declined to provide information requested in conjunction with an investigation. He is barred from any association with a FINRA member firm, and signed an Acceptance, Waiver & Consent (AWC) letter agreeing to the sanctions.
Winger was discharged by PFS on 8/10/2018 after a customer alleged that he took checks from her and deposited them into his personal bank account.
Through his legal counsel, Herrera indicated to FINRA that he declined to provide the requested information to them. On 7/23/2018, without admitting or denying the findings, Herrera signed the AWC letter, accepting sanctions. In the letter, FINRA indefinitely barred Herrera in all capacities.
Carter voluntarily resigned from Merrill Lynch on 2/8/2016, after she was under internal review by the firm for “fraud, wrongful taking of property, or violating investment-related statutes, regulations, rules or industry standards of conduct.” An amended Form U5 added that Carter had participated in outside business activities with a client or clients. Subsequent amended forms indicated that Carter assisted a client with an outside credit agreement and an outside investment arrangement with due diligence.