U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23715 / January 10, 2017
Securities and Exchange Commission v. Gregory T. Dean and Donald J. Fowler, 17-cv-00139 (S.D.N.Y.)(GHW)
SEC Charges Two Brokers With Defrauding Customers
On January 9, 2017, the Securities and Exchange Commission charged two New York-based brokers with fraudulently using an in-and-out trading strategy that was unsuitable for customers in order to generate hefty commissions for themselves.
The SEC's complaint alleges that Gregory T. Dean and Donald J. Fowler did no reasonable diligence to determine whether their investment strategy involving frequent buying and selling of securities could deliver even a minimal profit for their customers. Their strategy, which generally involved selling the securities within a week or two of purchase and charging customers a commission for each transaction, allegedly resulted in substantial losses for 27 customers.
The SEC's complaint, filed in federal court in Manhattan, charges Dean and Fowler with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The SEC's investigation was conducted by Kristin M. Pauley, David Stoelting, Barry O'Connell, Nathaniel I. Kolodny, Michael P. Fioribello, Leslie Kazon, and Thomas P. Smith Jr. in the New York office. The litigation will be led by Mr. Stoelting and Ms. Pauley. The case is being supervised by Sanjay Wadhwa. The examination that led to the investigation was conducted by Jennifer A. Grumbrecht, Jeffrey Berfond, Glen Riddle, and Margaret Lett.