The Securities and Exchange Commission (SEC) has charged JP Turner and Company along with its head supervisor and president for compliance failures related to churning. Three former brokers were also charged for churning client accounts with conservative investment objectives, causing severe losses while the brokers collected hefty fees. JP Turner and the company's president, William Mello, have agreed to settle the SEC charges, while an administrative proceeding continues against the three brokers.
Churning is a fraudulent practice in which brokers ignore their clients' investment objectives and engage in excessive trading for the purpose of generating commissions. The SEC alleged that former JP Turner brokers Dimitrios Koutsoubos, Ralph Calabro, and Jason Konner churned seven client accounts between January 2008 and December 2009. Commissions, fees, and margin interest to them totaled $845,000.00, while customers suffered approximately $2.7 million in losses. All three brokers work at different firms now.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. Executive vice president and head supervisor at JP Turner, Michael Bresner, was charged for failing to supervise Mr. Konner and Mr. Koutsoubos, who generated such astronomical commissions that it triggered a firm requirement that Mr. Bresner review the underlying trading activity. Despite several red flags, Mr. Bresner failed to take adequate action. Also, the settled order against JP Turner and the company's president, William Mello, found that adequate procedures were not implemented to detect and prevent churning. Mr. Mello was responsible for establishing and supervising the company's supervisory policies and procedures designed to detect and prevent churning. JP Turner did have a monitoring system to detect actively traded accounts, but the system imposed hardly any requirements and did not provide guidance to supervisors to review the accounts and take meaningful action.
The SEC's order censured JP Turner and requires payment of $200,000.00 in disgorgement, which was JP Turner's share of the commissions and fees generated by the churning. JP Turner will also have to pay $16,051.00 in prejudgment interest and a $200,000.00 penalty. In addition, Mr. Mello has been suspended from his supervisory capacity with a broker, broker-dealer, or investment adviser for a period of five months. He will have to pay a $45,000.00 penalty.
Have you suffered losses at JP Turner and Company due to churning? Did you have one of the 194 actively traded accounts serviced by Messrs. Calabro, Konner, and Koutsoubos that the SEC did not review? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Churning is a fraudulent practice in which brokers ignore their clients' investment objectives and engage in excessive trading for the purpose of generating commissions. The SEC alleged that former JP Turner brokers Dimitrios Koutsoubos, Ralph Calabro, and Jason Konner churned seven client accounts between January 2008 and December 2009. Commissions, fees, and margin interest to them totaled $845,000.00, while customers suffered approximately $2.7 million in losses. All three brokers work at different firms now.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. Executive vice president and head supervisor at JP Turner, Michael Bresner, was charged for failing to supervise Mr. Konner and Mr. Koutsoubos, who generated such astronomical commissions that it triggered a firm requirement that Mr. Bresner review the underlying trading activity. Despite several red flags, Mr. Bresner failed to take adequate action. Also, the settled order against JP Turner and the company's president, William Mello, found that adequate procedures were not implemented to detect and prevent churning. Mr. Mello was responsible for establishing and supervising the company's supervisory policies and procedures designed to detect and prevent churning. JP Turner did have a monitoring system to detect actively traded accounts, but the system imposed hardly any requirements and did not provide guidance to supervisors to review the accounts and take meaningful action.
The SEC's order censured JP Turner and requires payment of $200,000.00 in disgorgement, which was JP Turner's share of the commissions and fees generated by the churning. JP Turner will also have to pay $16,051.00 in prejudgment interest and a $200,000.00 penalty. In addition, Mr. Mello has been suspended from his supervisory capacity with a broker, broker-dealer, or investment adviser for a period of five months. He will have to pay a $45,000.00 penalty.
Have you suffered losses at JP Turner and Company due to churning? Did you have one of the 194 actively traded accounts serviced by Messrs. Calabro, Konner, and Koutsoubos that the SEC did not review? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
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