Markets Wired

On May 3, 2019, a federal district court entered a final consent judgment against a broker who was charged with defrauding customers by making unsuitable and unauthorized trades and churning customers’ accounts, which enriched the broker at the customers’ expense.

The SEC’s complaint, filed in the Southern District of New York, alleges that from July 2012 to October 2014, Rocco Roveccio, a New Jersey resident, recommended to seven customers a pattern of high-cost, in-and-out trading without any reasonable basis to believe that his customers could make a profit. Roveccio’s recommendations resulted in losses for the customers and gains for Roveccio. Roveccio allegedly also lied to his customers about the potential for the accounts to profit. The complaint also alleges that Roveccio engaged in unauthorized trading and churning.

The final judgment permanently enjoins Roveccio from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and orders Roveccio to pay $324,614, consisting of $147,115 in disgorgement, $17,499 in prejudgment interest and a civil penalty of $160,000. Separately, the SEC instituted settled administrative proceedings against Roveccio in which, without admitting or denying the findings, Roveccio consented to a Commission order barring him from the securities industry and penny stock trading.

Roveccio was formerly associated with Alexander Capital L.P., a New York-based broker-dealer. In June 2018, the SEC filed settled charges against the broker-dealer and two of its managers, including Roveccio’s former supervisor. The SEC also settled with two other former Alexander Capital brokers in September 2017 and March 2019.

Since 2017, the SEC has filed five enforcement actions against brokers for excessive and unsuitable trading, and the SEC’s Office of Investor Education and Advocacy and Broker-Dealer Task Force has issued an Investor Alert about excessive trading in brokerage accounts.

The SEC’s investigation has been conducted by David Oliwenstein, David Stoelting, Roseann Daniello, and Steven G. Rawlings, and supervised by Sanjay Wadhwa.