A former J.D. Nicholas & Associates Inc. broker must pay the SEC more than $2 million after a jury found him liable for profiting off trades customers never consented to, a New York federal district judge said.
Donald J. Fowler’s “apparent lack of interest in learning from past mistakes” also led the U.S. District Court for the Southern District of New York to impose a permanent injunction banning him from violating federal securities laws as part of its Tuesday opinion.
A jury returned a unanimous verdict in the Securities and Exchange Commission’s favor in June 2019.
Fowler recommended investments that weren’t suitable for any investor, implemented trades in customer accounts without obtaining consent, and earned “substantial commissions” on those trades, Judge Gregory H. Woods’ opinion said.
Woods ordered Fowler to disgorge more than $132,000 and pay a $1.95 million civil fine, calculated based on the highest penalty tier. Evidence at trial established that Fowler “took advantage of the relative lack of sophistication of some of his clients to bilk them,” justifying a higher fine, the opinion said.
Fowler’s trial testimony about his general investment views and his characterization of his conduct’s propriety “show him to present a substantial risk of future injury to his customers,” Woods said. He appeared “disdainful of his customers’ concerns, and unjustifiably satisfied with his performance in the face of concrete evidence of his malfeasance and data showing the terrible investment returns” for all of the affected clients.
“Fowler’s overconfidence may make him a good salesman, but it also makes him a danger to future customers,” the opinion said.
The SEC has 14 days to send the court its calculation of prejudgment interest on the disgorgement amount.
McCormick & O’Brien LLP and Wexler Burkhart Hirschberg & Unger LLP represented Fowler.
The case is SEC v. Fowler, 2020 BL 68771, S.D.N.Y., No. 17-cv-00139, 2/25/20.
To contact the reporter on this story:
To contact the editors responsible for this story: