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SEC Files Civil Complaint Alleging Churning Against Two New York Stockbrokers

Piggy Bank in a CageThe Securities and Exchange Commission (“SEC”) has filed a civil complaint (“Complaint”) in federal court against Mr. Zachary S. Berkey of Centerreach, NY and Mr. Daniel T. Fischer of Greenwich, CT, alleging that these financial advisors made unsuitable trades at the expense of customers.  The Complaint addresses alleged conduct that occurred when Messrs. Berkey and Fischer were both employed by Four Points Capital Partners LLC (“Four Points”) (CRD# 43149).

According to the Complaint, Messrs. Berkey and Fischer allegedly conducted “in-and-out trading” that was almost certain to incur losses for investors, while at the same time yielding commissions to the financial advisors.  Further, the Complaint indicates that ten (10) Four Points customers lost a total of $573,867, while Messrs. Berkey and Fischer earned commissions of $106,000 and $175,000 on these losing trades, respectively.

The SEC Complaint alleges that because the customers incurred significant costs with every transaction and the securities traded were held for short periods of time, the price of the securities had to rise significantly in order to realize even a minimal profit.

Without admitting or denying the SEC’s allegations, Mr. Fischer ultimately consented to a final judgment that permanently enjoins him from similar future violations and requires him to pay a fine of $160,000.  This contemplated settlement is currently pending review by the court for its approval.

According to the SEC, “churning refers to the excessive buying and selling of securities in your account by your broker, for the purpose of generating commissions and without regard to your investment objectives.”  In short, churning is a form of broker misconduct in which the financial advisor engages in excessive trading in order to generate unwarranted commissions at the expense of his or her client.

Investors with questions about a possible churning claim may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or  for a no-cost, confidential consultation.

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