On September 7, 2018, the Securities and Exchange Commission charged two brokers for recommending excessive levels of trading that were costly for retail customers but lucrative for the brokers.
In separate complaints filed in federal court in Manhattan on Friday, the SEC alleges that Florida resident Emil Botvinnik and New York resident Jovannie Aquino recommended frequent, short-term trades that generated large commissions for the brokers but were almost guaranteed to lose money for their customers. According to the SEC’s complaints, Botvinnik’s and Aquino’s customers – a number of whom were at or near retirement age – lost approximately $3.6 million as a result of the trades while the brokers pocketed approximately $4.6 million in commissions.
The complaints also allege that both brokers engaged in unauthorized trading and concealed material information from their customers about the transaction costs associated with their recommendations, which were likely to outstrip any potential monetary gains in the accounts.
The SEC’s complaints charge Botvinnik and Aquino with violations of antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The SEC’s investigation was conducted by Yael Berger, Jacqueline O’Reilly, Pamela Nolan, and Gregory Bockin, with assistance from Michael Fioribello. The litigation will be led by Mr. Bockin, Ms. Berger, Ms. O’Reilly, and Samantha Williams. The case is being supervised by Ms. Chion, Stacy Bogert, and Cheryl Crumpton.