Former Broker Zachary Berkey Ordered to Pay SEC Disgorgement and Penalties
On April 18, 2019, the United States District Court for the Southern District of New York, ordered a former broker, Zachary Berkey, to pay $106,000 in disgorgement, plus prejudgment interest, and $71,000 in civil penalties.
The SEC charged Zachary Berkey on December 6, 2017, alleging that, while a broker at Four Points Capital Partners LLC, Zachary Berkey conducted in-and-out trading that was almost certain to lose money for customers while yielding commissions for himself.
According to the complaint, Zachary Berkey’s customers incurred significant costs with every transaction and the securities were held briefly; thus, the price of the securities had to rise significantly for customers to realize even a minimal profit. The complaint also alleged that Zachary Berkey churned customer accounts and concealed material information from his customers, namely that the costs associated with their recommendations, including commissions and fees, would almost certainly exceed any potential gains on the trades.
The SEC’s complaint charged Zachary Berkey with violating the antifraud provisions, 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 sought permanent injunctions, disgorgement plus prejudgment interest and civil monetary penalties. Previously, without admitting or denying the SEC’s allegations, Zachary Berkey had consented to a judgment permanently enjoining him from future violations of the antifraud provisions.
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