Ex-First Allied rep to fight SEC churning charges
A rep formerly affiliated with First Allied Securities Inc. says he will fight SEC charges that he churned client accounts and made unauthorized and unsuitable trades for two institutional clients, resulting in commissions of $14.2 million.
A rep formerly affiliated with First Allied Securities Inc. says he will fight SEC charges that he churned client accounts and made unauthorized and unsuitable trades for two institutional clients, resulting in commissions of $14.2 million.
In a complaint filed yesterday, the Securities and Exchange Commission claimed that Harold H. Jaschke “continuously lied to two Florida municipal clients — the city of Kissimmee and the Toho Water Authority — “in order to continue his fraudulent trading, taking advantage of [his clients’] trust in him and their lack of investment sophistication.”
The regulator acknowledged, however, that Mr. Jaschke still managed to make a total profit of $9.8 million for the two institutional clients between June 2005 and March 2008.
An attorney for Mr. Jaschke, Don J. DeGabrielle, said the broker will deny the allegations in the SEC’s complaint.
“Mr. Jaschke has been a professional in the investment business for over 26 years and has never had any complaints filed against him for the conduct of his business,” Mr. DeGabrielle wrote in an e-mail to InvestmentNews. “The two municipal clients actually made a profit as a result of Mr. Jaschke’s investment strategy in a volatile market. We will be filing our answer with the court and are confident that this matter will be successfully defended.”
The SEC allegations center on a strategy of “high-risk, short-term Treasury bond trading” which used a high amount of leverage through the use of short-term loans known as repurchase agreements.
According to Financial Industry Regulatory Authority Inc. records, First Allied terminated Mr. Jaschke in August 2008 because of the SEC allegations of excessive trading and unsuitable recommendations in the accounts of two municipal clients. Although the Finra records do not go into any detail, it is typical for the SEC to file charges months or years after an initial inquiry or investigation.
He now has a registered investment advisory business, HHT Capital Partners LP. According to SEC records, the firm has zero assets under management.
At the same time the SEC charged Mr. Jaschke yesterday, it said in a settlementwith a First Allied executive, Jeffrey C. Young, that he “failed reasonably to supervise” the ex-broker. Mr. Young, the firm’s vice president of supervision until August, is now the vice president of special projects.
The SEC did not charge First Allied in the matter. The firm’s chief executive, Adam Antoniades, did not return a phone call seeking comment.
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