$175K: NYC Securities Firm, Employee Pay Fine, Restitution

csimt 2015, Press Release, Securities

Salesperson victimized two Montanans, barred from working in Montana

HELENA – A New York City-based financial services firm and one of its executives have paid more than $175,000 in restitution and fines to resolve an action brought by Montana Securities Commissioner Monica J. Lindeen after two Montana investors lost more than $100,000 through an illegal scheme run by one of the company’s employees.

The employee, William Horbatuk, has been permanently barred from doing business in Montana and agreed to a $10,000 fine.

The company, PHX Financial Inc., also known as Blackwell Capital Markets, Inc., has further agreed to stop doing business in Montana and give up its securities registration here for at least two years.

The case involved two Montana investors who hired Horbatuk to invest their money. As a condition of doing business in Montana, PHX was under orders to keep a closer watch on Horbatuk’s activities. Horbatuk had previously made trades with his client’s money intended to drive up commissions for himself at his clients’ expense – a process called “churning.”

Lindeen’s office was tipped off by an investor who suspected his accounts were being mismanaged. When the investor repeatedly requested information, PHX was unresponsive. Lindeen’s investigation showed PHX was not monitoring Horbatuk’s activity and in the absence of that oversight, he again engaged in churning.

PHX has already paid its $30,000 fine and more than $132,000 in restitution, including interest.

The case has been under investigation since last October. The final order in the case was recently signed and the two Montana victims received their restitution in late April.