Zachary Berkey, formerly with Four Points Capital Partners, Charged with Excessive Trading by SEC
Have you lost money with financial advisor Zachary Berkey of Melville, New York? We are continuing our investigation into allegations made Against Zachary S. Berkey. Berkey was previously the subject of a complaint by the Montana Securities Commission, and he recently faced charges from the Securities and Exchange Commission (SEC). According to the complaint filed against Berkey, Montana alleged that Berkey engaged in excessive trading with regard to one Montana resident between April 2013 and March 2014.
Montana alleged that one customer invested about $93,000 with Berkey’s brokerage firm, Four Points Capital Partners. Zachary Berkey initiated 99 transactions in the customer’s account which resulted in $1.3 million in purchases and $1.3 million in sales. This resulted in turnover rates of over 23 for that customer, and the total fees and commissions earned by Berkey and Four Points was over $44,000. Four Points’ profile for that investor indicated that he had an investment objective of “speculation”, but the customer characterized himself as a moderate to conservative investor.
InvestmentNews reported that Zachary Berkey and another financial advisor, Daniel T. Fischer, were both charged with churning accounts by the SEC. Fisher agreed to pay a $160,000 penalty, while Berkey’s case is proceeding in New York.
Excessive Trading or Churning
One of the most common ways to determine whether an account was excessively traded or churned is to determine the annual turnover ratio. This ratio shows how often the securities in the account are bought or sold within a year. Authority has held that an annual turnover of 4 or more is a “presumption” of churning, and an annual turnover of 6 or more is a “conclusion” of churning. Thus, if the accounts had turnovers over 23, then there would be a conclusion that there was churning or excessive trading.
Another way to determine whether there was excessive trading is the cost equity ratio. This ratio takes the commissions generated by the trading, divided by the average value of the account. This ratio essentially determines the returns that an account needs to make just to break even. Thus, an account with a cost-equity ratio of 47% would need to earn 47% just to break even from all the costs of trading.
Zachary Berkey is a financial advisor and registered representative of National Securities Corp. from May 2011 to April 2013. He was also a representative of Four Points Capital Partners from April 2013 to January 2015. He worked at a branch office in Melville, New York. Berkey has four customer complaints on his record, with some complaints alleging churning.
Brokerage firms like Four Points Capital Partners have a responsibility to adequately supervise all representatives who are registered through their firm. Brokerage firms also must take steps to ensure that their financial advisors follow all securities rules and regulations, as well as internal firm policies. When brokerage firms fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers.
Israels & Neuman PLC is a securities and investment fraud law firm with offices in Denver, Colorado and the Seattle area. We represent investors in FINRA arbitration proceedings in all 50 states, including investors throughout Montana. Our attorneys have represented over one thousand investors against many brokerage firms in the past.
Click to view: Four Points Capital Consent Order
Click to view: Berkey, Zachary Montana Order
Click to view: Berkey, Zachary Montana Complaint
Click to view: Berkey, Zachary BrokerCheck 10.10.16
If you lost money with Zachary M. Berkey or Four Points Capital Partners, please CONTACT US at 720-599-3505 for a free evaluation of your case.
Israels & Neuman, PLC is a private law firm and is not affiliated with any government or law enforcement agency. Any investigation referenced in this blog is independent in nature and is being conducted by our law firm privately, not in conjunction with any government or law enforcement agency. All information contained in this blog should be deemed statements of opinion derived from the author’s review of public records, not statements of fact. This blog is advertising material and does not create an attorney client relationship, nor does it constitute legal advice. Everyone’s situation is different and the question of whether or not you have a claim will vary on a case-by-case basis. In contingent representation, clients may still be liable for costs.