Gregory Patrick Bodkin Jr., of New York, New York, a stockbroker registered with Worden Capital Management LLC, was the subject of a customer initiated investment related FINRA securities arbitration claim that was settled to resolve allegations that Bodkin failed to supervise certain registered representatives in connection with the recommendation and sale of over-the-counter equities during the time that Bodkin was associated with Worden Capital Management LLC. Financial Industry Regulatory Authority (FINRA) Arbitration No. 21-00104 (August 15, 2022). Mr. Bodkin claims that he was added to the matter solely on the basis that his name appeared as an officer of the Firm on Schedule A of the Firm’s registration document (Form BD).
For the entirety of the client activity in question, Mr. Bodkin claims that he did not trade for the Claimant’s account, was not in the supervisory chain over Claimant’s account, did not have responsibility for reviewing client accounts, and was not responsible for the supervisory system of the Firm.
Therefore, at least according to Mr. Bodkinm he could not have been involved in the alleged violations.
However, control person liability does not require immediate supervision or participation in the wrongful conduct.
Section 20(a) of the Exchange Act of 1934 provides that:
Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.
Section 20(a) of the Exchange Act, 15 U.S.C. §27t.
To be a “control person” only requires that the person had “the opportunity and ability to control the conduct and activities of the “controlled person,” which includes the stockbroker and the brokerage firm itself for the violation of §10(b) of the Securities Exchange Act of 1934, and SEC Rule 10b-5 as promulgated thereunder.
In order to establish liability under Section 20(a), a plaintiff need only show that the controlling person had knowledge, or at least a duty to know, of the alleged wrongful activity, and the power or ability to control or influence the affairs of the “controlled persons.” Arthur Children’s Trust v. Keim, 994 F.2d 1390, 1398 (9th Cir. 1993); Powers v. Eichen, 977 F. Supp. 1031, 1044-45 (N.D. Cal. 1997) (“plaintiff need not show day-to-day control of affairs, only that defendants had possession of the power to influence in order to state a claim under Section 20(a)”). Control of a primary violator maybe demonstrated by “showing that the defendant possessed the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.’ In re Parmalat Sec. Litig., 594 F. Supp. 2d 444, 455-56 (S.D.N.Y. 2009) (citing SEC v. First Jersey Secs., Inc., 101 F.3d 1450, 1473-73 (2d Cir. 1996) (further citations omitted).); “[O]nly the ability to direct the actions of the controlled person, and not the active exercise thereof’ is necessary to establish control. 126 F. Supp. 2d at 764 (citation omitted). Mandell v. Reeve, 2011 U.S. Dist. LEXIS 114804 at 7 (S.D. N.Y. Oct. 4, 2011)(Sullivan, J), aff’d. Mandell v. Reeve, Civil Action No 11-5238 (2d Cir. Feb. 4, 2013). Section 20(a) of the Exchange Act, 15 U.S.C. §27t. Liability is then subject to the good faith defense that the individual respondents had no knowledge, did not participate, and was otherwise reasonably unable to prevent the wrongful conduct. Ernst & Ernst v. Hochfelder, 425 U.S.185 (1976).
FINRA Public Disclosure shows that Bodkin is referenced in eight other customer initiated investment related disputes concerning Bodkin’s conduct while associated with securities broker dealers, including Worden Capital Management LLC. On January 12, 2022, a customer filed an investment related FINRA securities arbitration claim involving Bodkin’s conduct in which the customer requested $745,360.01 in damages based upon allegations that Bodkin made unsuitable recommendations, was negligent, made misrepresentations of material fact, made omissions of material fact, churned the customer’s account, and failed to supervise certain registered representatives’ recommendations of over-the-counter equities. FINRA Arbitration No. 22-00057.
On February 1, 2022, another customer filed an investment related FINRA securities arbitration claim involving Bodkin’s conduct in which the customer requested $2,500,000.00 in damages based upon allegations that Bodkin breached his fiduciary duties, breached a contract, was negligent, and failed to supervise certain registered representatives in connection with the recommendation and sale of real estate securities. FINRA Arbitration No. 22-00145.
Bodkin was also referenced in a FINRA securities arbitration claim that was settled to resolve allegations that Bodkin failed to supervise certain registered representatives. FINRA Arbitration No. 21-01521 (February 4, 2022).
On May 31, 2022, a FINRA securities arbitration claim involving Bodkin’s conduct was settled to resolve allegations that Bodkin committed fraud, churned the customer’s account, engaged in excessive trading, breached his fiduciary duties, made unsuitable recommendations, breached a contract, was negligent, and failed to supervise certain registered representatives’ recommendations of over-the-counter equities. FINRA Arbitration No. 21-02438.
Bodkin was also referenced in a FINRA securities arbitration claim that was settled to resolve allegations that Bodkin failed to supervise certain registered representatives, breached his fiduciary duties, made unsuitable recommendations, breached a contract, and was negligent. FINRA Arbitration No. 21-01804 (May 31, 2022).
On July 19, 2022, a different FINRA securities arbitration claim involving Bodkin’s conduct was settled to resolve allegations that Bodkin failed to supervise certain registered representatives in connection with the recommendation and sale of over-the-counter equities and stocks. FINRA Arbitration No. 21-01101.
Bodkin was associated with Worden Capital Management LLC in New York, NY, as a stockbroker from May of 2017 to October of 2021, and has been associated with Bourne Hill Investment Services Inc. in Mineola, NY, as a stockbroker since March 3, 2022.
