More On Legal & Compliancefrom The Advisor's Professional Library
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
- U.S. Securities and Exchange Commission Information This information sheet contains general information about certain provisions of the Investment Advisers Act of 1940 and selected rules under the Advisers Act. It also provides information about the resources available from the SEC to help advisors understand and comply with these laws and rules.
The Securities and Exchange Commission (SEC) announced Monday that it has charged three former brokers at an Atlanta-based brokerage firm, JP Turner & Co., for “churning” the accounts of customers with conservative investment objectives, causing the customers to lose $2.7 million.
The SEC says it also charged the head supervisor, Michael Bresner, as well as the firm’s president, William Mello, and the firm itself for compliance failures.
JP Turner and Mello agreed to settle the SEC’s charges, while an administrative proceeding will continue against the three brokers and the supervisor.
In settling the SEC’s charges without admitting or denying the findings, JP Turner agreed to hire an independent consultant to review the firm’s supervisory procedures in order to prevent future violations. The SEC’s order censures JP Turner and requires payment of $200,000 in disgorgement (JP Turner’s approximate share of the commissions and fees generated by the fraudulent churning) plus $16,051 in prejudgment interest and a $200,000 penalty.
The order suspends Mello from association in a supervisory capacity with a broker, dealer, or investment advisor for a period of five months and requires him to pay a $45,000 penalty.
The SEC’s Enforcement Division alleges that the brokers Ralph Calabro, Jason Konner and Dimitrios Koutsoubos engaged in churning while they worked at JP Turner, collectively generating commissions, fees and margin interest totaling approximately $845,000 while the defrauded customers suffered aggregate losses of approximately $2.7 million.
“Broker-dealers’ supervisory systems must provide customers with reasonable protection from churning and similar abuses. JP Turner’s supervisory systems failed to do that,” said William P. Hicks, associate director of the SEC’s Atlanta Regional Office, in a statement.
According to the SEC’s order instituting administrative proceedings against the three brokers and the supervisor, Calabro lives in Matawan, N.J., and Konner and Koutsoubos live in Brooklyn, N.Y. They all work at different firms now. While at JP Turner, they collectively churned the accounts of seven customers with conservative investment objectives and low or moderate risk tolerances. The churning occurred between January 2008 and December 2009.