The Securities and Exchange Commission has permanently barred the former chief compliance officer of a once-registered brokerage firm for her role in an alleged fraudulent unauthorized trading scheme.
Barbara Desiderio, the former president and chief compliance officer at Global Arena Capital Corp., agreed to the punishment as part of a settlement reached with the SEC on Aug. 11 and published Tuesday. Without admitting or denying the SEC’s findings, Desiderio will be barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, in addition to a ban on participation in the offering of any penny stocks.
Any reapplication for association on Desiderio’s part will be dependent upon payment of any potential penalties ordered by the court in the SEC’s ongoing proceedings, among other factors.
The SEC in March filed a complaint against Desiderio and three other individuals at Global for their roles in the alleged trading scheme. Joshua Turney and Hector Perez, both registered representatives at Global, also each agreed to be permanently barred, while the SEC’s claims against Jonah Engler, who indirectly owned and controlled Global, are pending. The SEC’s complaint alleges Engler orchestrated the scheme while Turney and Perez carried it out with Desiderio’s assistance.
According to the SEC, Desiderio, from August 2014 through May 2015, served as Global’s chief compliance officer. During the relevant period, she held responsibility for responding to regulatory inquiries and updating the Financial Industry Regulatory Authority’s (FINRA) Central Registration Depository, the database for required information about registered representatives and firms.
In March 2015, Engler and Desiderio learned that FINRA, a self-regulatory organization, would not approve their application to transfer ownership of Global to Engler’s holding company. Engler, based on increasing scrutiny from FINRA into the firm’s sales practices, “suspected he would soon be forced to close the firm,” according to the SEC complaint. Over Global’s remaining time of operation—approximately April 1 through June 4, 2015—Engler directed Turney and Perez to engage in unauthorized trading (ordering trades for non-discretionary customer accounts) to generate commission revenue, the SEC alleges.
The unauthorized trading allegedly generated over $2.4 million in unlawful markups, markdowns, and commissions for their firm and resulted in over $4 million in net losses for their customers. The SEC’s ongoing civil action seeks disgorgement of ill-gotten gains plus prejudgment interest, penalties, and injunctive relief.