SEC charges two brokers for churning that lost clients $3.6 million
The brokers worked for the same broker-dealer, which has since been expelled from the industry, at the time of their respective alleged frauds.
The Securities and Exchange Commission charged two brokers with excessive trading in client accounts, also known as “churning,” which the agency claims resulted in an aggregate $3.6 million in losses for clients and generated $4.6 million in commissions for the brokers.
The brokers, Emil Botvinnik and Jovannie Aquino, worked for the New York-based brokerage Meyers Associates — which subsequently changed its name to Windsor Street Capital — at the time of the alleged fraud, according to the SEC. Finra, the federal brokerage regulator, expelled Windsor Street Capital from the securities industry in May 2018.
The SEC filed separate complaints against Mr. Botvinnik and Mr. Aquino on Sep. 7 in the U.S. District Court for the Southern District of New York. The SEC is charging the brokers with violations of antifraud provisions of federal securities laws, alleging they engaged in unauthorized trading and concealed material information from customers about transaction costs associated with their recommendations.
Mr. Botvinnik, 38, a resident of Coral Gables, Fla., is no longer a registered broker, according to his BrokerCheck record. The SEC claims he defrauded at least five retail clients between June 2012 and November 2014. His alleged fraud resulted in $2.7 million in client losses and $3.7 million in “ill-gotten gains,” according to the SEC.
Mr. Botvinnik’s attorney, Michael Bachner of Bachner & Associates, said that all client accounts were non-discretionary and that all transactions were therefore authorized by the clients.
“In addition, every client was advised by the broker as well as by the compliance department, as we understood from the compliance department, for the commissions and fees being charged,” Mr. Bachner said, adding, “We intend to vigorously defend against the allegations.”
Mr. Aquino, 37, a resident of the Bronx, New York, is currently registered with the broker-dealer Spartan Capital Securities. The SEC claims Mr. Aquino defrauded at least seven clients, resulting in $881,000 in losses for clients and earning him $935,000 in commissions.
He did not return a call seeking comment by press time.
Both brokers have moved around to several different broker-dealers, some of which have since been expelled from the industry by Finra. Mr. Botvinnik has worked at 11 different brokerage firms during his 13 years in the securities industry, and Mr. Aquino has worked for 12 broker-dealers, according to the SEC complaints.
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