Corporate & Securities Law

First Allied Pays $2 Million In Harold Jaschke Case

By Steven Caruso

First Allied Securities Firm will pay $2 million to settle allegations from the Securities and Exchange Commission (SEC) that it failed to properly supervise one of its independent contrators, Harold H. Jaschke. Jaschke, who worked for First Allied from 2005 to 2008, was accused of allegedly duping two institutional investors by making trades without their knowledge or authorization.

The SEC initially charged Jaschke in December 2009, accusing the former First Allied rep of churning client accounts and making unauthorized and unsuitable trades for the city of Kissimmee, Florida, and the Toho Water Authority of Florida. According to the complaint, Jaschke?s alleged actions netted commissions of more than $14 million.

As reported March 5 by Investment News, when First Allied?s former vice president of supervision, Jeffrey C. Young, was first notified of ?abnormal trading? in the two clients? accounts, he stated that he was ?unsure? of whether to contact them with the information. Ultimately, no one at First Allied ever did.

The SEC says Jaschke routinely used his personal e-mail account to correspond with clients. This means First Allied should have been aware of the Jaschke?s conduct because he used the same e-mail account to correspond with supervisors and senior management, according to the SEC.

First Allied is owned by Advanced Equities Financial Corp.

Full post as published by Representing Investors on March 08, 2010 (boomark / email).