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SEC Charges Four Individuals in Unauthorized Trading Scheme

On March 31, 2020, the SEC filed a complaint against four individuals for allegedly operating a fraudulent unauthorized trading scheme. The complaint filed in the United States District Court for the Eastern District of New York alleges defendants Jonah Engler, Joshua Turney, Hector Perez, and Barbara Desiderio (collectively “the defendants”) conducted a scheme to execute thousands of unauthorized trades in Global Arena Capital Corporation (“Global”) customer accounts generating over $2.4 million in commission revenue for Global and incurring massive losses for its customers.

The alleged scheme began in 2015 when Jonah Engler suspected Global, the brokerage firm he indirectly owned and controlled, would be forced to shut down in the coming months. In the time he had left to operate, Engler allegedly instructed Turney and Perez, both registered representatives of Global, to engage in unauthorized trading in non-discretionary client accounts to generate commission revenue. At the direction of Engler, Turney and Perez allegedly made fake phone calls to their customers in order to make it appear as if the trades had the required client approval. The defendants allegedly left customers long silent voicemails or simply left their phone on mute when calling customers. The SEC alleges this was a discernable attempt by defendants to cover up their knowingly fraudulent unauthorized trades.

The complaint alleges that Turney and Perez, under the direction of Engler and with the assistance of Desiderio, placed thousands of unauthorized trades in customer accounts between April and June of 2015. These allegedly fraudulent trades yielded over $2.4 million in commission revenue for Global, and incurred customer losses of over $4 million as a result.

The SEC claims defendants Engler, Turney and Perez violated the antifraud provisions of Section 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. Desiderio is alleged to have aided and abetted her co-defendants’ violations. The SEC also seeks disgorgement of all ill-gotten gains, prejudgment interest, penalties, and injunctive relief.

You can find more information on this case and access the SEC Complaint at the following link https://www.sec.gov/litigation/litreleases/2020/lr24788.htm. If you have any questions about broker-dealer misconduct or other securities-related issues, please contact Tomlinson & Shapiro, P.C. at (312) 715-8770.

 

Michael Shapiro
(312) 715-8770
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