SEC wins churning case against Long Island broker

Court will determine remedies against Donald Fowler at a later date

Jun 21, 2019 @ 12:15 pm

By InvestmentNews

Donald Fowler, a Long Island broker charged by the Securities and Exchange Commission with excessive trading of customer accounts, has lost his day in court.

New York jurors have found Mr. Fowler liable on all counts of the SEC's charges, finding that he violated the antifraud provisions of the federal securities laws. The court will determine remedies against him at a later date.

(More:Galvin charges Janney with churning high-fee mutual funds)

Mr. Fowler's partner, Gregory T. Dean, also charged in the same complaint for engaging in the same fraudulent practices, admitted to his misconduct and settled with the SEC on the eve of trial. In addition to admitting that his conduct violated the law, Mr. Dean agreed to pay $253,881 in disgorgement, $50,521 in prejudgment interest, and a civil penalty in the amount of $253,881.

At the time the churning took place, both brokers were employed by J.D. Nicholas & Associates Inc., a now-defunct broker-dealer that was located in Syosset, N.Y. According to his BrokerCheck record, Mr. Fowler is now associated with Worden Capital Management of Rockville Centre, N.Y.

In its case against Mr. Fowler, the SEC presented evidence showing that Mr. Fowler "failed to do any reasonable due diligence to determine whether his trading, which involved frequent buying and selling of securities, could deliver a profit for his customers," the SEC said in a release.

(More:SEC wins churning case against 'cockroaching' broker)

The SEC showed that the cumulative commissions Mr. Fowler charged were so high that investors would have needed to generate, on average, a 142% return to break even.

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