David Fagenson Investigation

Industry regulator FINRA has suspended a former UBS broker for alleged excessive trading in elderly client accounts.

According to a letter of acceptance, waiver, and consent published by FINRA, David Fagenson allegedly “engaged in quantitatively unsuitable trading” in the accounts of three clients, who ranged in age from their 70s to 95 years old.”

As reported in Financial Advisor IQ by Alex Padalka, Fagenson’s trading allegedly resulted in an annualized turnover rate of 16.07 and an annualized cost-to-equity ratio of 31.75% for one client. FINRA generally considers trading excessive when the turnover rate is more than six or a cost-to-equity ratio is more than 20%, according to FINRA’s letter of consent.

The same client’s account “allegedly generated over $260,000 in commissions and markups for Fagenson and UBS and a loss of $283,314 for the client,” FINRA says. In another two accounts that were examined, “Fagenson’s trading allegedly resulted in more than $210,000 in commissions and markups for him and the firm and a loss of $239,000 for the client,” according to the FINRA letter of consent.

“Fagenson consented to an eight-month suspension without admitting or denying FINRA’s findings,” the regulator says. “FINRA opted against levying any monetary sanctions against Fagenson in light of his filing for Chapter 7 bankruptcy this March,” according to the letter of consent.

According to Fagenson’s BrokerCheck report, he began his career as a broker in 1987 and joined UBS in 2010. Then, he left UBS in 2016 and joined Newbridge Securities Corporation that same year. UBS discharged Fagenson in September 2016.  According to his BrokerCheck report, “The Financial Advisor [Fagenson] was discharged after a review found that while on heightened supervision, he violated firm policy by exercising time and price discretion, texting with clients and engaging in short term trading of preferred shares.”

Roughly two months after his discharge from UBS, Fagenson joined Newbridge Securities. David Fagenson has worked at multiple firms over the years before UBS, including MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (WEST PALM BEACH, FL); MORGAN STANLEY DW INC. (PURCHASE, NY); PAINE WEBBER INCORPORATED (WEEHAWKEN, NJ); PRUDENTIAL SECURITIES INCORPORATED (NEW YORK, NY); and KIDDER, PEABODY & CO. INCORPORATED (NEW YORK, NY).

FINRA maintains a database of investor complaints and disciplinary and employment history for registered representatives and publishes some of this information on its BrokerCheck website, www.brokercheck.finra.org. According to David Fagenson’s BrokerCheck report, he has 16 disclosure events.

The following disclosures were reported: