The Financial Industry Regulatory Authority Inc. last week suspended a former UBS Financial Services Inc. broker who made a number of unsuitable trades in the accounts of three senior citizens, creating steep losses for the clients and generating hundreds of thousands of dollars in commissions and markups for himself and UBS.
Finra suspended David H. Fagenson for eight months over the matter, according to the settlement. The trading violations of industry rules occurred from January 2012 to September 2016,
according to the Finra settlement.
Mr. Fagenson's BrokerCheck profile shows he was fired by UBS in September 2016 after the firm put him on heightened supervision and found that he violated certain trading policies, including those regarding the short-term trading of preferred shares and texting with clients.
Since December 2016, he
has been registered with Newbridge Securities Corp. According to his BrokerCheck report, he has 16 disclosure events on his record, including a bankruptcy filing from March.
His attorney in the matter, James Sallah, said that Mr. Fagenson was "happy to have the matter behind him. He cooperated fully with the Finra investigation and looks forward to his future in the securities business once the suspension is up."
Mr. Fagenson, who has been a registered broker for 31 years at eight firms, agreed to the settlement without admitting to or denying Finra's findings.
One of Mr. Fagenson's clients, a 95-year-old widow with a net worth of more than $5 million, had several accounts at UBS. Mr. Fagenson had de facto control of the client's brokerage account, according to Finra, and over the period cited by Finra the account lost $283,000 but generated $260,000 in commissions and markups.
Similarly, a married couple in their 70s who were Mr. Fagenson's clients and had a net worth of more than $5 million saw a loss in their brokerage account of $239,000. At the same time, the account was charged more than $210,000 in commissions and markups.
Mr. Fagenson's trading in the accounts of the three clients was "excessive and unsuitable" given the clients' ages and levels of risk tolerance, according to Finra.
Meanwhile, UBS Financial Services last month sued Mr. Fagenson in federal court in West Palm Beach, Fla., seeking close to $890,000 in damages from a Finra arbitration case he lost last year. The dispute centered on the balance of a bonus the firm paid to Mr. Fagenson in the form of forgivable loans. It is common for firms and brokers to haggle legally over the balances of such loans.
