The Securities and Exchange Commission has charged two registered representatives from New York with making unsuitable investment recommendations for their clients, according to Financial Advisor.
The SEC filed a complaint in federal court for the Southern District of New York against 45-year-old Nathaniel Clay and 53-year-old Terrence Reagan. The two were charged with violating the Securities Act and the Exchange Act.
According to the complaint, the misconduct occurred while Reagan and Clay were both working at a broker-dealer from December 2015 to December 2018. The SEC said the two recommended investments to at least eight clients that involved frequent buying and selling of securities without a reasonable basis to believe the recommendations were suitable.
This high-cost strategy of frequent stock trading, along with commissions and fees, was said to have resulted in significant profits for the two defendants but substantial losses for their clients of over $739,000. Reagan was also accused of engaging in this conduct at another firm from March 2020 to April 2021. The complaint said the two representatives “knew or recklessly disregarded that their recommendations to their customers were unsuitable”. They were also accused of “making material misrepresentations and omissions to their customers in connection with their recommendations.”
Clay did not admit or deny the allegations but consented to entry of a final judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. He was ordered to pay disgorgement of $150,898, plus prejudgment interest of $22,936, and a civil monetary penalty of $150,898.
Reagan was charged with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10(b)-5 thereunder. The SEC is seeking permanent injunctive relief, disgorgement plus prejudgment interest, and a civil penalty.
At Lewitas Hyman, we represent clients nationwide who are the victims of unauthorized trading, breaches of fiduciary duty and other forms of financial adviser misconduct and securities fraud. Our team of lawyers brings a diverse range of knowledge and experiences to our clients’ cases. Having worked for financial institutions, including Morgan Stanley and UBS Financial Services, and regulators such as the SEC, we have deep insight in all aspects of securities law. We’ll help you understand your rights and options. Contact us at (844) 651-2643 or email our team to learn more.