The Securities and Exchange Commission on Wednesday barred and fined two brokers at a now-defunct Connecticut brokerage for giving customer order information to certain favored customers, which in turn helped those customers get better prices and generated extra commissions for their firm.
The former co-head of equities trading at Rochdale Securities, Hal Tunick, and his subordinate, Patrick Burke, allegedly defrauded customers by using their order information to advise two longtime customers to trade ahead of these orders, according to the SEC’s Enforcement Division.
Both Tunick and Burke consented to the SEC’s orders without admitting or denying the findings.
To settle the charges, the SEC says Tunick, of Chappaqua, New York, agreed to pay a civil penalty of $125,000 and to be barred from the securities industry.
In addition, Burke, of Wilton, Connecticut, agreed to pay a civil penalty of $50,000, disgorgement of commissions plus prejudgment interest, and to be barred from the securities industry with a right to reapply after five years.
“These brokers repeatedly shirked their obligation to seek best execution for their customers so they could get extra commissions for their firm and better prices for favored customers,” said Joseph G. Sansone, co-chief of the Enforcement Division’s Market Abuse Unit, in a statement. “They are now paying the price for putting the interests of favored customers and themselves ahead of the interests of their other customers.”
The SEC says that once the favored customers purchased or sold short the shares, Tunick and Burke arranged for them to unload their positions to the customers who had placed the original orders.