Three former JP Turner & Company brokers have been accused by the Securities and Exchange Commission of defrauding clients out of $2.7 million by "churning" their accounts.

Brokers Ralph Calabro of Matawan, N.J., and Jason Konner and Dimitrios Koutsoubos, both of Brooklyn, N.Y., allegedly disregarded these clients' conservative investment goals and engaged in excessive trading to generate commissions and other revenue-a practice referred to in the industry as "churning," according to the SEC Enforcement Division.

The SEC also charged the former head supervisor at Atlanta-based JP Turner & Company, Michael Bresner of Atlanta, firm President William Mello and the firm itself with compliance violations. JP Turner and Mello have agreed to settle the charges, while an administrative proceedings continue against the three brokers and Bresner, according to the SEC.

The firm and Mello consented to a settlement in which they neither denied nor admitted to the SEC's findings. Mello was required to pay a $45,000 penalty and was suspended from association in a supervisory capacity with a broker, dealer or investment advisor for five months.

"We are pleased to have this matter behind us. While we neither admit nor deny the findings, we want to thank the SEC for working with us to bring this matter to a conclusion," said J.P. Turner director of communications Heidi Wheatley in a prepared statement. 

"As stated in the order, the firm enhanced its procedures and cooperated fully with the SEC during both the Commission's comprehensive routine examination of our firm as well as the resolution of this matter," Wheatley added. "The firm is stronger today than it was back in 2008 and 2009 and we have replaced personnel and enhanced our procedures and systems. The registered representatives who were alleged to have committed misconduct were terminated long ago. Our executive leadership team is committed to making J.P. Turner a market leader that focuses on client service and satisfaction."

The brokers are accused of churning the accounts of seven clients between December 2008 and December 2009. The churning generated commissions, fees and margin interest totaling about $845,000 and resulted in total losses of about $2.7 million for the clients, according to the SEC. The accused brokers have since moved on to other firms, the SEC said.

The case also represented a failure by JP Turner & Company to adequately supervise its brokers, the SEC said. "Bresner failed to take appropriate action in response to the trading in these accounts despite several read flags," the SEC said in a press release.

The firm and Mello were charged because "they failed to implement adequate procedures to detect and prevent the fraudulent churning of customer accounts," the SEC said.

In the settlement, the firm agreed to pay $200,000 in disgorgement, a $200,000 penalty and $16,051 in prejudgment interest. JP Turner also agreed to hire an independent consultant to review the firm's supervisory procedures.

-Raymond Fazzi