SEC Charges Former Registered Representative in Connection with Unauthorized Trading Scheme
July 2, 2020
File No. 3-19853
July 2, 2020. The Securities and Exchange Commission today announced settled charges against Michael D. Tannen, a former registered representative, for his role in an unauthorized trading scheme through retail customer accounts at New York broker-dealer Global Arena Capital Corp. The SEC previously filed a litigated action in the Eastern District of New York against four others involved in the scheme.
According to the SEC's order, in early May 2015, one of Global's owners offered Tannen a share of trading commissions in exchange for allowing two other registered representatives to conduct trading in certain of Tannen's non-discretionary customer accounts. The order finds that Tannen had reason to believe that these registered representatives had engaged in unauthorized trading during this period. Tannen agreed to the owner's proposal and permitted the two other brokers to use his representative code for these customer accounts, but did not take reasonable steps to ensure that the trades conducted in the accounts were authorized by the customers. According to the order, the two brokers ultimately executed over 200 unauthorized trades in at least 25 different customer accounts associated with Tannen, which resulted in approximately $161,000 in gross commissions and fees for Global. The order finds that Tannen received approximately $20,000 of the commissions.
The SEC's order finds that Tannen violated the antifraud provisions of Section 17(a)(3) of the Securities Act of 1933. Without admitting or denying the findings in the SEC's order, Tannen consented to the entry of a cease-and-desist order and agreed to pay disgorgement of $20,000, prejudgment interest of $4,645.35, and a civil penalty of $15,000. Tannen also agreed to an industry bar, a penny stock bar, and an investment company prohibition.
The SEC's investigation was conducted by Hane L. Kim, Margaret Spillane, Jacqueline Fine, Sandra Yanez, and Steven G. Rawlings, and supervised by Lara S. Mehraban. The SEC thanks the Financial Industry Regulatory Authority (FINRA) for their assistance in this matter.