Two US broker barred for fraud
28 October 2015 Connecticut
Image: Shutterstock
Two US brokers have been barred from practicing and fined by the Securities and Exchange Commission (SEC) for defrauding customers and sharing personal order information for financial gain.
Hal Tunick of Chappaqua, New York, and his subordinate, Patrick Burke of Wilton, Connecticut, were co-heads of equities trading at the now-defunct brokerage firm Rochdale Securities.
Tunick and Burke were accused of defrauding customer by sharing private order information with two long-term clients in order for them to be able to trade ahead of these orders.
Once those favoured customers purchased or sold short the shares, the brokers arranged for them to unload their positions to the customers who had placed the original orders, according to the SEC.
The SEC found that the defrauded customers generally received worse prices than they would have if their orders had been routed directly to the market.
“As a result of this scheme, which Tunick and Burke perpetrated from at least 2010 to 2012, Rochdale essentially earned double trading commissions: one for executing trades by the favoured customer of Tunick or Burke and another for executing the original Rochdale customer order,” said SEC report.
Tunick agreed to pay a $125,000 civil penalty and was barred from the securities industry.
Burke also agreed to pay $50,000 disgorgement of commissions plus pre-judgement interest, and to be barred from the securities industry with a right to reapply after five years.
Both men consented to the SEC’s orders without admitting or denying the findings.
Joseph Sansone, co-chief of the enforcement division’s market abuse unit, said: “These brokers repeatedly shirked their obligation to seek best execution for their customers so they could get extra commissions for their firm and better prices for favoured customers.”
Hal Tunick of Chappaqua, New York, and his subordinate, Patrick Burke of Wilton, Connecticut, were co-heads of equities trading at the now-defunct brokerage firm Rochdale Securities.
Tunick and Burke were accused of defrauding customer by sharing private order information with two long-term clients in order for them to be able to trade ahead of these orders.
Once those favoured customers purchased or sold short the shares, the brokers arranged for them to unload their positions to the customers who had placed the original orders, according to the SEC.
The SEC found that the defrauded customers generally received worse prices than they would have if their orders had been routed directly to the market.
“As a result of this scheme, which Tunick and Burke perpetrated from at least 2010 to 2012, Rochdale essentially earned double trading commissions: one for executing trades by the favoured customer of Tunick or Burke and another for executing the original Rochdale customer order,” said SEC report.
Tunick agreed to pay a $125,000 civil penalty and was barred from the securities industry.
Burke also agreed to pay $50,000 disgorgement of commissions plus pre-judgement interest, and to be barred from the securities industry with a right to reapply after five years.
Both men consented to the SEC’s orders without admitting or denying the findings.
Joseph Sansone, co-chief of the enforcement division’s market abuse unit, said: “These brokers repeatedly shirked their obligation to seek best execution for their customers so they could get extra commissions for their firm and better prices for favoured customers.”
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