The US Securities and Exchange Commission (SEC) has secured a final judgment against ex-Alexander Capital broker William Gennity, who is accused of excessive churning in clients’ brokerage accounts. Gennity, whom the Financial Industry Regulatory Authority (FINRA) had earlier suspended, will pay nearly $128K in disgorgement, nearly $15K in prejudgment interest, and a $160K civil penalty.
The SEC’s complaint accused Gennity of recommending costly, “in-and-out trading” to four clients between 7/2012 and 8/2014 without having any reasonable grounds for thinking that doing so would cause them to make money. Instead, they lost money as a result, while Gennity made money. The alleged churning purportedly took place while he was an Alexander Capital broker.
Churning typically involves a broker engaging in trades in order to earn more commissions.
With about 13 years working in the securities industry, Gennity has been employed at nine other brokerage firms, including First Standard Financial Company, Capital, Legend Securities, National Securities, JP Turner & Company, and Joseph Stevens & Company. His BrokerCheck record shows several customer disputes, three of them still pending. Two of the investor claims were settled. Allegations against him include churning, unauthorized trading, breach of fiduciary duty, unauthorized margin use, excessive fees, unsuitable concentration, and fraud.
InvestmentNews, in its article about the SEC’s final judgment into this matter, described Gennity as a “cockroaching” broker. The term “cockroaching” refers to when brokers jump from one broker-dealer to another, often to firms that are more likely to tolerate or ignore bad behavior.
Last year, Alexander Capital settled SEC charges accusing the brokerage firm and two of its managers of inadequate supervision of three of its brokers, including Gennity, who were accused of churning, making unsuitable recommendations to customers, and unauthorized trading leading to significant losses, even as the brokers earned huge commissions. The two other brokers were Laurence M. Torres and Rocco Roveccio, both of whom the SEC also charged with fraud. The broker-dealer agreed to a censure and paying almost $194K for allegedly ill-gotten gains, $23K in interest, and an almost $194K penalty. The two Alexander Capital managers named in the civil case were Barry Eisenberg and Philip Noto.
SEC Bars Broker for 1.3M Fraud
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In another SEC recent case resulting in a final judgment, ex-broker John Gregory Schmidt settled allegations accusing him of selling the securities of several of his retail brokerage customers and then secretly moving more than $1M of the proceeds to other customers to conceal shortfall in the latter’s accounts. The transactions purportedly involved variable annuities that were sold without clients’ authorization. The majority of his victims were older, inexperienced investors. Meantime, Schmidt earned more than $230K in commissions from those who were impacted by his alleged investor fraud.
Schmidt, who worked in the securities industry for nearly four decades, was barred by FINRA. He was previously a registered broker with Wells Fargo (WFC), Stifel Nicolaus & Company (SF), First Union, and other firms. Now, he is settling the SEC’s civil charges without denying or admitting to wrongdoing.
Our broker misconduct lawyers are dedicated to helping investors who were harmed in recovering their financial losses. We have helped clients recover their money lost due to the following and more:
- Margin account abuse
- Unauthorized trades
- Inadequate supervision
- Failure to execute trades
- Breach of obligation/duty
- Excessive commissions
- Unregistered securities sales
Contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) and ask to speak with an experienced broker fraud attorney today.
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