Barry Todd Eisenberg of New York New York a stockbroker and branch manager formerly registered with Alexander Capital LP is the subject of a customer initiated investment related arbitration claim in which the customer requested $606,046.00 in damages based upon allegations that Eisenberg failed to supervise stockbrokers who executed inappropriate stock transactions in at least two Alexander Capital customer accounts causing those customers to experience investment losses. Financial Industry Regulatory Authority (FINRA) Arbitration No. 20-01366 (May 13, 2020).
This is not the first time that Eisenberg has been accused of supervisory failures by a customer of a securities broker dealer. FINRA Public Disclosure reveals that a customer initiated investment related arbitration claim concerning Eisenberg’s activities was resolved for $635,000.00 in damages supported by allegations that during the time that Eisenberg was associated with JP Turner Company, he did not supervise stock transactions effected in the customer’s account.
Eisenberg has been fined $15,000.00 and barred in all principal capacities by Securities and Exchange Commission (SEC) according to an Order containing findings that Eisenberg failed to adequately supervise an Alexander Capital stockbroker in compliance with federal securities laws. In the Matter of Barry T. Eisenberg Administrative Proceeding File No. 3-18563 (June 29, 2018).
According to SEC, the Alexander Capital securities broker under Eisenberg’s command made recommendations that were not suitable for one or more customers. SEC stated that the advice provided by Eisenberg’s subordinate stockbroker failed to be compatible with the customers’ objectives, risk tolerances and financial needs. The regulator indicated that one customer’s risk tolerance and investment objectives had been falsely stated on account documents to make it seem as though the customer was willing to take maximum risk.
SEC mentioned that Eisenberg was supposed to evaluate the customer’s account to determine whether the stockbroker churned it. This involved reviewing turnover rates, in-and-out trading and cost-to-equity ratios. Eisenberg was supposed to contact customers whose accounts were suspected of churning and to sanction any stockbrokers who engaged in these activities.
The stockbroker under Eisenberg’s watch failed to have an adequate basis in concluding that in-and-out trading was appropriate for any investor. SEC indicated that customers were only able to profit by offsetting the costs of the transactions but the stockbroker’s excessive trading caused those customers to be nearly certain to experience investment losses.
SEC relayed that the customers’ cost-to-equity ratios and turnover rates demonstrated excessive trading. Cost-to-equity ratios ranged from 112 percent to 200 percent. Turnover rates ranged from 41 to 47. Customers sustained a collective $272,744.00 in investment losses. The subordinate stockbroker allegedly churned customer accounts.
Eisenberg neglected to supervise the stockbroker with a view towards preventing these sales practice violations. The regulator noted that Eisenberg received alerts for the stockbroker’s trading but failed to review or otherwise address these alerts. Eisenberg also neglected to follow the commissions that were applied on trades that the stockbroker made in customer accounts.
SEC determined that Eisenberg’s subordinate stockbroker’s actions were violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5 and Securities Act of 1933 Section 17(a). Eisenberg’s supervisory failures were determined by SEC to be violative of Securities Exchange Act of 1934 Section 15(b)(4)(E).
Eisenberg has been registered with Alexander Capital LP since May 17, 2013.
