Brokers

SEC Says 2 N.Y. Brokers Reaped Thousands In Commissions From ‘Unsuitable’ Investments


Two New York-area registered representatives have been charged by the Securities and Exchange Commission with making unsuitable investment recommendations to clients that led to “substantial losses” and “heavy commissions.” One of the accused has paid more than $324,000 to settle the charges.


Terrence Reagan, 53, of Coram, N.Y., and Nathaniel Clay, 45, of New York, N.Y., were accused by the agency of violating the Securities Act and the Exchange Act in a complaint filed on January 12 in U.S. District Court for the Southern District of New York.


Reagan and Clay made unsuitable recommendations while employed at an unnamed broker-dealer between December 2015 and December 2018, according to the SEC’s complaint, which said Reagan repeated this conduct while employed at a second broker-dealer from March 2020 to April 2021.


According to Reagan’s Finra BrokerCheck records, he was employed at U.K.-based Laidlaw & Company from 2015 to 2019, and at Arive Capital Markets from 2019 to 2021. Clay’s BrokerCheck record also shows him employed at Laidlaw & Company from 2015 to 2019. 


Financial Advisor’s attempts to reach both representatives on Tuesday were unsuccessful.


Clay and Reagan allegedly recommended a high-frequency pattern of “high-cost, in-and-out trading” to at least eight clients, according to the SEC complaint, which eventually led to losses of more than $739,000. Of those client losses, $690,000 were from fees and commissions generated by the trading, with Reagan and Clay each receiving approximately $151,000 in commissions.


After moving to a new firm in 2020, Reagan allegedly had one of his clients who followed him open an account at the new broker-dealer where the same pattern of fraudulent trading continued, the SEC claims. As a result, the customer experienced losses of nearly $29,000, with more than $48,500 in commissions paid, approximately $24,000 to Reagan himself.


“Reagan and Clay each violated the antifraud provisions of the federal securities laws because they knew or recklessly disregarded that their recommendations to their customers were unsuitable, and they further violated the antifraud provisions by making material misrepresentations and omissions to their customers in connection with their recommendations,” the complaint said.


The SEC sought civil monetary penalties, disgorgement of ill-gotten gains with pre-judgment interest, and injunctions from future misbehavior.


Clay, who was barred by Finra in 2020 for failure to comply with an arbitration and settlement, according to his BrokerCheck record, consented to the SEC’s charges without admitting or denying the findings, paying $150,898 in disgorgement, $22,936 in interest and a $150,898 civil penalty.


The SEC has asked that its action against Reagan be tried by a jury.

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