The Securities and Exchange Commission has accused a New York broker of excessive account churning that caused his clients to lose more than $1 million.
In a complaint filed with U.S. District Court in the Eastern District of New York, the SEC alleged that Baris Cabalar, 42, of Wellington, Fla., while working at broker-dealer PHX Financial of New York City and Fort Lauderdale, Fla., made more than $400,000 in commissions and fees through “improper trading strategies” related to the brokerage accounts of eight retail customers from January 2019 through October 2021.
The SEC said Calabar recommended to these clients “a short-term, high volume trading strategy without a reasonable basis that such a strategy would be profitable, and failing to disclose when recommending such trading that the commissions and fees that PHX and Cabalar charged would likely result in customers losing money.”
In making these trading recommendations, he violated his “obligation to have a reasonable basis for the investment recommendations,” the SEC said.
In one instance of “explicit misrepresentation,” the SEC said, Cabalar told one client that he could recoup in around one year the $70,000 the customer lost with a different broker. The client ended up losing more than $36,000 from Calabar’s trading recommendations from March 2020 through September 2021, the SEC said.
The biggest customer loss was $209,052.25 from Cabalar’s trading from April 2020 through July 2021, the agency said.
The eight affected customers lost $1,069,898.22 and Cabalar and PHX received $403,915.34 in commissions, the SEC said.
Cabalar didn't immediately respond to a request for comment.
The commission alleged Cabalar violated Reg BI, among other regulations, by failing to act in his clients’ best interests and putting his interests and those of PHX ahead of theirs.
The SEC said Cabalar was aware of those obligations due to his years of work and training at multiple broker-dealers.
Cabalar’s BrokerCheck report shows the broker has a record of several violations in his 16 years in the business, including judgements, liens and customer disputes. Before PHX Financial, Cabalar worked with Legend Securities and John Thomas Financial, which were both eventually banned from the industry by Finra, according to BrokerCheck.
The SEC is is asking the court to “permanently” restrain and enjoin Cabalar from engaging in the acts and practices set forth in the complaint. It also demands that return all “ill-gotten gains he received as a result of the violations alleged here and to pay prejudgment interest on it.”
Cabalar has been a registered representative with PHX Financial since 2015 to the present and worked out of its Hauppauge, N.Y., office through 2022. He also worked in PHX’s Fort Lauderdale, Fla., office after moving to that state in 2022 and has been registered with Finra since 2013.