On September 7, 2018, the U.S. Securities and Exchange Commission (“SEC”) filed two federal lawsuits on accusing New York-based brokers, Emil Botvinnik (“Botvinnik”) and Jovannie Aquino (“Aquino”), of violating the anti-fraud provisions of the federal securities law and earning a combined $4.6 million through excessive high-frequency trading.
Botvinnik and Aquino recommended that their customers use a frequent, short-term trade strategy that carried significant fees and commissions, marketing the strategy as profitable to the investors. According to the SEC complaints, “[t]he frequency of [the defendant’s] trading, coupled with the commissions and fees on every trade, made it almost certain that his customers would lose money from this strategy.”
While working as a broker for Meyers Associates LP (“Meyers”) from June 2012 to November 2014, Botvinnik told five customers whom he had solicited to open securities trading accounts that he would trade using a profitable strategy. Despite his duty to attempt to benefit his investors, Botvinnik’s customers’ investments would have needed annual returns between 31% and 150% in order to pay all his transaction costs.
Botvinnik is also accused of executing trades without his customers’ approval. His fraudulent strategy accumulated approximately $2.7 million in investor losses, while he made a $3.7 million profit.
The SEC’s allegations in their complaint against Aquino are nearly identical, though he defrauded at least seven different customers while working for Meyers between December 2015 and November 2017. His customers’ investments would have required annual returns between 21% and 406% to cover Aquino’s transaction fees.
Aquino disregarded his customers’ investment objectives, financial needs, and risk tolerances, and also executed trades without their approval. His activities amounted to approximately $881,000 in investor losses, while he profited by $935,000.
Chairwoman of the SEC Enforcement Division’s Broker-Dealer Task Force, Antonia Chion, announced, “We are diligently pursuing deceitful brokers who prey on their customers…Brokers need to ensure that the level of trading they recommend is suitable for their customers, and investors should be on the lookout for frequent trading in their accounts.”
The complaints seek to enjoin Botvinnik and Aquino from further violations of securities law, disgorge them of their profits with interest, and require them to pay a civil penalty.
The legal team at Shepherd, Finkelman, Miller & Shah, LLP (“SFMS”) has significant experience litigating securities matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier (firstname.lastname@example.org) or Chiharu Sekino (email@example.com). We can also be reached toll-free at (866) 540-5505.
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Seal, Dean. “SEC Accuses 2 Brokers Of $4.6M Excessive Trading Frauds.” Law 360. Last modified on September 10, 2018.