The Securities and Exchange Commission (“SEC”) announced on June 20, 2019 that Donald Fowler (CRD#: 4989632, Syosset, New York) was found guilty of securities fraud. Notably, a jury returned a verdict in favor of SEC in Case #: 1:17-cv-00139. Here’s more on the SEC action against Fowler:
SEC Charges Donald Fowler With Securities Fraud
On January 9, 2017, SEC charged Fowler with violating federal securities laws, including Section 10(b) of the Exchange Act; Rule 10b-5; and Section 17(a) of the Securities Act. SEC claimed that Fowler and Gregory Dean (CRD#: 4922996), who were both J.D. Nicholas registered representatives from 2007 to 2014, advised clients regarding a fraudulent trading strategy. Apparently, this strategy involved Fowler and Dean excessively trading stocks and making fraudulent in-and-out trades.
SEC claimed that Donald Fowler and Gregory Dean made more than $800,000 by making excessive trades to generate high commissions and fees from clients. Those clients apparently believed in Fowler and Dean’s expertise relating to stock selections; however, they sustained $1,374,202 in losses.
Fowler Allegedly Makes Unsuitable Recommendations To Clients About Trading Strategy
SEC’s Complaint alleges Donald Fowler and Gregory Dean basically used the same trading strategy for 27 J.D. Nicholas clients. Allegedly, Fowler and Dean had no basis to recommend the trading strategy for any investor, let alone the 27 clients. SEC claimed that Fowler and Dean knew that their flawed strategy, including in-and-out trading, would very likely result in clients losing money. Plus, SEC says that the brokers failed to do any significant due diligence on their strategy. Instead, they bought and sold the same stock positions regardless of price movements. Supposedly, Fowler and Dean engaged in the strategy mainly to generate commissions.
SEC Claims Donald Fowler Churned 27 Clients’ Investment Accounts
Also, SEC contended that Donald Fowler and Gregory Dean churned the clients’ accounts. SEC says that the 27 clients’ accounts had turnover rates ranging from 20 to 241, with an average of 105. Notably, SEC indicated that a turnover of 6 indicates excessive trading. SEC also claimed a cost-to-equity ratio exceeding 20% indicates excessive trading. The 27 clients’ accounts had an average annualized cost-to-equity ratio exceeding 110%.
Evidently, Dean settled with SEC on June 10, 2019, agreeing to pay a $253,881 civil penalty and to disgorge another $253,881. Soon, the court will determine Donald Fowler’s punishment.
At least 11 clients brought investment disputes about Donald Fowler. Here is a summary of some recent claims:
Worden Capital Client Files Arbitration Suggesting Fowler Churned Account
FINRA BrokerCheck shows Fowler joined Worden Capital Management in 2014. A client of Worden Capital Management brought FINRA Arbitration #:16-01503 on May 22, 2017. First of all, the client claimed that Donald Fowler churned the client’s account and made excessive trades. Secondly, Fowler allegedly made unauthorized trades of investments including stocks and OTC equities. Thirdly, the client claimed that Fowler breached a fiduciary duty. Finally, the client contended that Worden Capital failed to supervise Fowler. Because of this, on May 22, 2017, Worden Capital Management paid the client $400,000 to resolve the matter. In fact, Fowler personally contributed $95,000 towards this resolution.
J.D. Nicholas Client Files Arbitration Claiming Donald Fowler Made Unsuitable Trades
The second most recent dispute comes from a J.D. Nicholas client who filed FINRA Arbitration #:15-03411 on March 7, 2016. Like the most recent dispute, this client claimed Donald Fowler churned the client’s account. Supposedly, Fowler traded mainly to generate commissions for himself. Indeed, the client claimed Fowler abused mark-ups and commissions which he charged the client. Additionally, the client suggested that Fowler made OTC equities and options trades which were unfitting and unsuitable for the client. Fowler allegedly failed to make decisions that were in the client’s best interest, and J.D. Nicholas failed to supervise his actions. For this reason, on February 2, 2017, the firm paid the client $90,000 to resolve the matter.
Have you experienced losses by investing with securities broker Donald Fowler? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.