SEC to Probe Whether Former Ferris, Baker Watts Inc. General Counsel Failed to Properly Supervise Broker Convicted of Securities Fraud

The US Securities and Exchange Commission says it will investigate allegations that former Ferris, Baker Watts Inc. general counsel Theodore W. Urban did not properly supervise Stephen Glantz. In 2007, Glantz, who was employed by Ferris for almost thee years, pleaded guilty to lying to law enforcement officials and securities fraud.

The SEC says Urban ignored a number of warnings he received connecting Glantz to questionable activities and unauthorized trades. Urban also allegedly knew that numerous complaints had already been made against Glantz even before he came to work at Ferris. Not only did Glantz’s Form U-4 registration application show 10 customer complaints, but others had warned about his questionable reputation. Yet Urban still gave the broker more freedom than he did other brokers at the firm.

Urban is a former SEC staffer who was an Assistant Director in the Division of Market Regulation. In 2004, he recommended that Ferris, Baker Watts fire Glantz over unsuitable trades involving customer accounts. Urban later backed down from his stance. Instead, he and vice chairman Louis Akers were in agreement that Glantz be put under “special supervision.”

Glantz, another registered representative at another broker-dealer, and Glantz’ client David Dadante, were accused of manipulating the market for Innotrac Corp. Glantz also made unsuitable and unauthorized trades in a number of securities in his customers’ accounts.

Urban, according to his attorney, will contest the allegations.

Royal Bank of Canada subsidiary RBC Wealth Management acquired Ferris for $230 million in 2008.

While financial losses do occur when investing in the market, investor losses that are a result of broker fraud are unacceptable. You shouldn’t have to suffer because a broker or broker-dealer was negligent or engaged in misconduct.