Former First Standard Financial Company LLC Broker William Gennity Barred by SEC and FINRA
Posted on Tuesday, June 25th, 2019 at 8:20 pm
Former First Standard Financial Company LLC broker William Gennity (CRD# 4913490) was barred by FINRA and the Securities and Exchange Commission (SEC) for churning customer accounts and making unsuitable investment recommendations. Gennity was registered with First Standard Financial Company LLC in Staten Island, New York from 2014 to 2018. Previously, he was registered with Alexander Capital, L.P. in New York, New York from 2012 to 2014.
In May 2019, a former client of First Standard Financial won an award in a FINRA arbitration for compensatory damages for $2,404,376.97 for losses sustained from concentrated investments and excessive trading. The investors were clients of Gennity.
The causes of action included unsuitability, unauthorized trading, failure to supervise, and breach of fiduciary duty. The causes of action relate to Claimant’s allegation that Respondents engaged in a scheme to generate commissions at the expense of protecting Claimant’s investment capital. Claimant asserted that Gennity placed him in concentrated positions in various securities, including Adamis Pharmaceuticals, Advanced Micro Devices, Energous, and Global Star, and traded his account so excessively that there was no possibility that the account would earn a return that could cover the costs incurred as a result of the trading activity. The FINRA arbitration hearing was conducted in Dallas, Texas.
In April 2019, FINRA barred Gennity from the securities industry. In March 2019, the SEC barred Gennity from association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO. According to Gennity’s Brokercheck, “The Commission’s complaint alleged that, during the period from July 2012 to August 2014, Gennity recommended to four customers – Customers 1 through 4 – a pattern of high cost, in-and-out trading without any reasonable basis to believe that his recommendations were suitable for anyone. The Commission’s complaint also alleged that: (a) Gennity’s recommendations resulted in losses for the customers and ill-gotten gains for Gennity; (b) the recommendations made by Gennity were unsuitable for Customers 1 and 2, as they were incompatible with the customers’ financial needs, investment objectives, risk tolerance and circumstances; (c) Gennity concealed material information from and made material misrepresentations to his customers; (d) Gennity churned the accounts of Customers 1 and 2; and (e) Gennity made unauthorized trades in the accounts of Customers 1 through 4.”
In September 2017, the SEC opened an investigation into Gennity and other registered representative alleging that while registered at Alexander Capital, L.P. from 2012 to 2014, the brokers violated the antifraud provisions of the federal securities laws. According to Gennity’s Brokercheck, “the Defendants had a duty to have a reasonable basis for recommendations that they made to their customers. In violation of this duty, Gennity recommended to four customers, and the other defendant recommended to seven customers, a pattern of high cost, in-and-out trading without any reasonable basis to believe that their recommendations were suitable for anyone. These recommendations resulted in losses for the customers and ill-gotten gains for Gennity and the other defendant. Defendants knew or recklessly disregarded that their recommendations, for which they had no reasonable basis, were not suitable for anyone. The Defendant’s recommendations were unsuitable for certain of their customers in light of those customers’ financial needs, investment objectives and circumstances. Third, the defendants made material misrepresentations and omissions to customers. Fourth, they churned customer accounts. Finally, the defendants engaged in unauthorized trading. As a result of these violations, Gennity and the other defendant received approximately $280,000 and $206,000, respectively, in commissions. The eleven customers suffered losses totaling $683,038.” Gennity was sanctioned to a money penalty other than fines in the amount of $127,686.03.
In February 2017, the United States Securities and Exchange Commission (SEC) opened an investigation against Gennity regarding, “Allege violations of 17(a) of Securities Act of 1933 and Section 10(b) Securities Act 1934 and Rule 10b-5.” 17(a) of Securities Act of 1933 pertains to “negligent securities fraud,” while Section 10(b) Securities Act 1934 and Rule 10b-5 “prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security.”
In August 2016, the state of Montana opened an investigation into Gennity alleging, “Excessive trading; unauthorized trading; unauthorized use of margin; discretionary trading without authorization; unsuitable recommendation; charging excessive fees; fraud.” This is currently pending.
Gennity has been the subject of seven additional customer complaints between 2014 and 2019, one of which was withdrawn and one was closed without action, according to his CRD report:
February 2019. “Unsuitable trades, unauthorized trading & excessive trading.” The customer is seeking $380,000 in damages in this pending customer complaint.
December 2018. “Churning and unsuitable trades.” The customer is seeking $90,198 in damages in this pending customer complaint.
July 2017. “Churning, breach of fiduciary duty.” The customer sought $200,000 in damages and the case was settled for $75,000.
November 2016. “Client spoke to compliance on 11/08/2016 regarding an allegation of unauthorized trades that occurred on 10/26/2016 and 11/01/2016. Client alleges that he informed the rep on 11/1 that he did not wish to own the additional 6000 shares of the security he already owned that was purchased on his behalf on 11/26. He further alleges that instead of cancelling the trade on 11/1, the rep sold the position against his wishes resulting in a loss. He requested that both trades be cancelled and that he not be liable for any incurred losses. Total transactional loss was approximately $12,000.” The case was settled for $12,029.52.
August 2014. “Churned & unsuitable concentrated position.” The customer sought $28,627.46 in damages and the case was settled for $14,900.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, First Standard Financial Company LLC may be liable for investment or other losses suffered by Gennity’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.Disclaimer: Clients are responsible for costs. Contingency fee is calculated before deducting costs incurred in the case.