SEC Obtains Final Judgment Against Former Broker for Defrauding Customers
Litigation Release No. 24416 / March 4, 2019
Securities and Exchange Commission v. William C. Gennity and Rocco Roveccio, No. 17-CV-7424, (S.D.N.Y.) filed September 28, 2017
On March 1, 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 that 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 August 2014, William C. Gennity recommended to four customers a pattern of high-cost, in-and-out trading without any reasonable basis to believe that his customers could make a profit. Gennity's recommendations resulted in losses for the customers and gains for Gennity. Gennity allegedly also lied to his customers about the potential for the accounts to profit. The complaint also alleges that Gennity engaged in unauthorized trading and churning.
The final judgment permanently enjoins Gennity from violating 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 Gennity to pay $302,483, consisting of $127,686 in disgorgement, $14,797 in prejudgment interest and a civil penalty of $160,000. Separately, the SEC instituted settled administrative proceedings against Gennity in which, without admitting or denying the findings, Gennity consented to a Commission order barring him from the securities industry and penny stock trading.
Gennity 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 Gennity's former supervisor.
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.