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SEC Charges NY Broker-Dealer and Supervisors Over Churning

By Alex Padalka July 3, 2018

The SEC has settled with New York-based broker-dealer Alexander Capital and two supervisors at the firm over alleged failures to supervise churning in client accounts and unsuitable trading, according to a press release from the regulator.

Alexander Capital allegedly lacked adequate policies and procedures as well as the systems to implement them to prevent wrongdoing by its brokers William Gennity, Rocco Roveccio and Laurence Torres, according to an SEC order charging the company.

In September, the regulator charged the brokers with causing customer losses totaling hundreds of thousands of dollars while racking up substantial commissions and fees. As part of last week’s settlement, Alexander Capital agreed to pay back $193,775 of allegedly ill-gotten gains and $23,437 in interest, as well as a $193,775 penalty, according to the SEC’s press release.

The company also agreed to bring on an independent consultant to analyze its polices and procedures and the systems used to implement them, the SEC says.

In separate orders, the regulator also says that Alexander Capital supervisors Philip Noto II and Barry Eisenberg ignored indications of excessive trading and failed to supervise brokers, according to the press release.

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Noto failed to supervise two brokers while Eisenberg failed to supervise one broker, according to the SEC. Noto agreed to a permanent bar from serving in a supervisory capacity and to pay a $20,000 penalty, the regulator says. Eisenberg agreed to a five-year supervisory bar and to a penalty of $15,000. Both brokers and Alexander Capital settled the SEC’s charges without admitting or denying its findings, the regulator says.