Benjamin Solomon of New York New York a stockbroker and supervisor formerly registered with Deutsche Bank Securities Inc. has been fined $165,000.00 and suspended by Securities and Exchange Commission (SEC) for twelve months from associating with any broker dealer or investment adviser according to an Order Instituting Administrative Proceedings pursuant to Section 15(b) of the Securities Exchange Act of 1934 wherein Solomon was found to have failed to supervise Deutsche Bank Securities traders in a manner designed to prevent them from committing fraud. In the Matter of Deutsche Bank Securities Inc. and Benjamin Solomon Administrative Proceeding File No. 3-18367 (Feb. 12, 2018).
According to the Order, Solomon and Deutsche Bank Securities failed to identify and prevent fraudulent secondary market transactions concerning non-agency commercial mortgage backed securities. The Order stated that from 2011 to 2015, traders and salespersons employed by Deutsche Bank Securities falsified statements to customers about the pricing of commercial mortgage backed securities in order to increase the firm’s profits. The traders and salespersons reportedly lied and misled customers concerning the difference between the prices paid for the commercial mortgage backed securities and the prices that those securities were sold for.
Apparently, the firm neglected to create and maintain procedures and policies adequately geared towards identifying and preventing misleading and false statements being made by sales personnel and traders. SEC concluded that Solomon also neglected to supervise the firm’s traders by failing to prevent traders from falsifying statements and misleading customers.
In one case, on October 28, 2013, a firm trader informed a customer that a commercial mortgage backed security would be purchased for 74-05 7/8; however Deutsche Bank Securities actually paid 73 for the security. The customer apparently acquiesced to buying the security at 74-05 7/8 and even paid additional compensation to the firm because the customer thought that the firm did not stand to profit from the transaction. Consequently, $94,687.00 of the $104,687.00 profit earned by Deutsche Bank Securities was due to the misstatement by the trader concerning Deutsche Bank Securities’ purchase price.
In another case, a trader purchased a bond for Deutsche Bank Securities’ account at a 735 spread. Subsequently, a salesperson offered the bond to a customer of the firm; however, in so doing he claimed that the transaction involved another customer of the firm selling the bond. Evidently, the salesperson and trader knew that there was no customer selling the bond. Nonetheless, the salesperson and trader apparently agreed to lie to the purchasing customer by stating that the selling customer would not sell the bond for less than 715. The customer reportedly purchased the bond at 714. Consequently, the Order stated that $12,354.00 of the $54,140.00 in profits Deutsche Bank Securities earned had been attributed to the false statements made by the salesperson.
The Order stated that as supervisor, Solomon knew of multiple instances in which Deutsche Bank Securities customers were not provided correct information about trades; however, Solomon failed to take any steps to correct the misconduct.
For example, the Order stated that on January 17, 2012, a bond was purchased by Solomon for Deutsche Bank Securities’ account at 58. Apparently, the bond was offered to the customer by a trader at a price of 58.75, where that trader informed the customer that the bond was purchased at 58.5. The customer reportedly accepted the offer based upon the trader’s misrepresentation of the purchase price. Solomon reportedly contacted the trader to inform him that the customer believed that the trader only profiting by .25. The Order stated that $125,000.00 of the $187,500.00 profit earned by Deutsche Bank Securities was based upon the traders’ misrepresentation. Solomon purportedly did nothing to clear the customer’s confusion.
In another instance, the Order stated that a trader and salesperson agreed for the salesperson to inform a customer that a bond was acquired by Deutsche Bank Securities at price higher than 63. Solomon supposedly knew about the salesperson’s comments and agreed for the customer to be told that the bond was purchased by the firm at 63.25. The Order revealed that the customer paid 63.25 as a result, allowing the firm to accumulate $18,750.00 in profits based on the misstatements.
SEC found that in sum, $1,476,245.00 of the $3,729,743.00 in profits earned by Deutsche Bank Securities had been based upon misleading or false statements having been made concerning the pricing of commercial mortgage backed securities. Consequently, the traders supervised by Solomon violated Securities and Exchange Act of 1934 Section 10(b), SEC Rule 10b-5 and Securities Act of 1933 Section 17(a).
SEC stated that throughout this period, when Solomon was made aware of the misleading and false statements made by customers, he took steps to conceal those traders’ actions instead of taking action to prevent customers from being defrauded. Traders apparently believed that it was Solomon’s agenda to trick customers so that Deutsche Bank Securities’ profits could be maximized.
Solomon was discharged by Deutsche Bank Securities on August 5, 2015 based upon accusations of his supervisory failures and violations of the firm’s policies and procedures.
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.
This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. Attorney Advertisement. See Important Disclaimer
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
