The Securities and Exchange Commission has charged Alexander Capital, a New York broker-dealer firm, and two of its managers for failing to supervise three brokers who made unsuitable recommendations to investors, “churned” accounts and made unauthorised trades that resulted in substantial losses to the firm’s customers while generating large commissions for themselves.

The SEC says that Alexander Capital failed to reasonably supervise William Gennity, Rocco Roveccio and Laurence Torres, brokers who were previously charged with fraud in September. According to the order, Alexander Capital lacked reasonable supervisory policies and administrative systems to run them. The SEC believes that if these systems had been in place, Alexander Capital would have probably have prevented the wrongdoing.

In separate orders, the SEC also states that supervisors Philip Noto and Barry Eisenberg ignored 'red flags' that indicated excessive trading and failed to supervise brokers with a view to keeping them compliant with securities laws.

Alexander Capital agreed to be censured and to pay $193,775 of allegedly ill-gotten gains, $23,437 in interest, and a $193,775 penalty. The firm also agreed to hire an independent consultant to review its policies and procedures and the systems to implement them. Noto agreed to a permanent supervisory bar and to pay a $20,000 penalty and Eisenberg agreed to a five-year supervisory bar and to pay a $15,000 penalty.