New York Securities Lawyer Blog
The Securities and Exchange Commission (“SEC”) filed a Complaint against Daniel Bergin, a senior equity trader at Cushing MLP Asset Management LP (“Cushing”), charging him with front running client orders. Cushing is a registered investment advisory firm owned by Swank Capital, which primarily invests in master limited partnerships and energy-related securities. Front running is defined as the unethical and illegal practice of a broker trading a security based upon information that was not yet provided to the broker’s clients. According to the SEC Complaint, Bergin used accounts registered to his wife to conduct personal securities trades before executing large orders of the same securities for clients, which earned him at least $1.7 million in profits. The Complaint also names Bergin’s wife, Jacqueline Zaun, as a relief defendant in order to recover the purported profits from her accounts. Specifically, the SEC Complaint alleges that of the $1.7 million in profits, more than $520,000 was generated in Bergin’s wife’s account between 2011 and 2012 from 132 specific instances of front running client orders. The Complaint also alleges that Bergin used privileged information regarding the timing and extent of trades the firm made on behalf of clients to effectuate the profitable trades in his wife’s accounts. This conduct similarly violated Cushing’s policies and procedures which strictly prohibited employees from engaging in personal trading of securities within seven days of a client’s trade in the same security. Swank Capital made the following statement: “As the SEC Complaint makes clear, these illegal trades were actively concealed from the firm. Consistent with our zero-tolerance policy related to such matters, we have taken swift and decisive action, and terminated the individual’s employment.” Marshall Sprung, deputy chief of the SEC Enforcement Division’s Asset Management Unit, made the following statement: “Bergin betrayed the trust of his clients by secretly using information about their trades to gain an unfair trading advantage and reap massive profits for himself.” Moreover, David Woodcock, Director of the SEC’s Fort Worth regional office that conducted the investigation of Bergin made the following statement: “Bergin’s misconduct is particularly egregious because his firm depended on him to manage market exposure and risk for its investments. Instead, he pitted his clients” financial interests against his own.”
Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Additionally, Lax & Neville has extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of sales practice abuses. Please contact our team of attorneys for a consultation at (212) 696-1999.