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Category Archives: Harold Jaschke, former employer: First Allied Securities

First Allied Pays $2 Million In Harold Jaschke Case

First Allied Securities Firm will pay $2 million to settle allegations from the Securities and Exchange Commission (SEC) that it failed to properly supervise one of its independent contrators, Harold H. Jaschke. Jaschke, who worked for First Allied from 2005 to 2008, was accused of allegedly duping two institutional investors by making trades without their knowledge or authorization.

The SEC initially charged Jaschke in December 2009, accusing the former First Allied rep of churning client accounts and making unauthorized and unsuitable trades for the city of Kissimmee, Florida, and the Toho Water Authority of Florida. According to the complaint, Jaschke’s alleged actions netted commissions of more than $14 million.

As reported March 5 by Investment News, when First Allied’s former vice president of supervision, Jeffrey C. Young, was first notified of “abnormal trading” in the two clients’ accounts, he stated that he was “unsure” of whether to contact them with the information. Ultimately, no one at First Allied ever did.

The SEC says Jaschke routinely used his personal e-mail account to correspond with clients. This means First Allied should have been aware of the Jaschke’s conduct because he used the same e-mail account to correspond with supervisors and senior management, according to the SEC.

First Allied is owned by Advanced Equities Financial Corp.

First Allied Securities, Broker Harold Jaschke Cited In SEC Complaint

The Securities and Exchange Commission (SEC) has charged Harold. H. Jaschke, a former broker with First Allied Securities, with fraud for allegedly churning accounts held by the city of Kissimmee, Florida, and the Tohopekaliga Water Authority and lying to both government bodies about his trading practices.

Churning is a fraudulent practice that occurs when a broker engages in excessive trading as a way to generate commissions and other revenue without regard for a customer’s investment objectives.

The complaint against Jaschke was filed in federal court in Orlando on Dec. 29. According to the documents, Jaschke was associated with First Allied Securities when the alleged violations occurred.

The SEC alleges that Jaschke employed a high-risk, short-term trading strategy involving zero-coupon U.S. Treasury bonds. According to the complaint, the broker sometimes bought and sold the same bond within a matter of days, and occasionally on the same day.  The practices exposed the municipalities to millions of dollars in losses while yielding more than $14 million in commissions for Jaschke, according to the SEC.

The SEC also alleges that Jaschke knew the municipalities’ ordinances prohibited his trading strategy and required that their funds be invested with “the paramount consideration to be safety of capital.”

San Diego-based First Allied Securities fired Jaschke late last year. Jaschke then started his own firm, HHJ Capital Partners G.P. LLC.

In a related enforcement action, the SEC charged Jeffrey C. Young, the former vice president of supervision for First Allied Securities, of failing to reasonably supervise Jaschke during his employment with the firm. Without admitting or denying the findings, Young settled the case and paid a $25,000 penalty. Young also is barred from acting in a supervisory capacity for a period of nine months.

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