SEC reaches $1.5M settlement with broker Emil Botvinnik
An action brought by the United States Securities and Exchange Commission (SEC) against broker Emil Botvinnik is near its conclusion, according to documents filed with the New York Southern District Court. On May 20, 2021, the SEC submitted a status update, indicating that a settlement was reached.
According to the proposed final judgment, Botvinnik is permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any device, scheme, or artifice to defraud.
Further, the proposed final judgment says that the defendant is liable for disgorgement of $1,140,996.48 representing net profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $208,155.86 and a civil penalty in the amount of $160,000.00. Botvinnik will satisfy this obligation by paying $1,509,152.34 to the Securities and Exchange Commission.
Let’s recall that, in September 2018, the SEC charged Emil Botvinnik and Jovannie Aquino for recommending excessive levels of trading that were costly for retail customers but lucrative for the brokers.
The SEC alleged that Botvinnik and Aquino recommended frequent, short-term trades that generated large commissions for the brokers but were almost guaranteed to lose money for their customers. According to the SEC’s complaints, Botvinnik’s and Aquino’s customers – a number of whom were at or near retirement age – lost approximately $3.6 million as a result of the trades while the brokers pocketed approximately $4.6 million in commissions.
The complaints also alleged that both brokers engaged in unauthorized trading and concealed material information from their customers about the transaction costs associated with their recommendations, which were likely to outstrip any potential monetary gains in the accounts.
The SEC’s complaints charged Botvinnik and Aquino with violations of antifraud provisions of the federal securities laws.