Former Financial Advisors Barry Eisenberg and Philip Noto Sanctioned by the SEC

• November 22, 2024
• Alexander Capital

Barry Todd Eisenberg (CRD#: 2313107) and Philip Noto (CRD#: 4837180) were both registered brokers at Alexander Capital, L.P., in New York.

Broker’s History

Barry Eisenberg entered the securities industry in 1993, and previously worked with Royce Investment Group, Inc.; Marlowe & Company (FINRA expelled the firm in 2001); Clearing Services of America, Inc.; DIF Securities Inc.; Aura Financial Services, Inc.; and J.P. Turner & Company, LLC.

Philip Noto entered the securities industry in 2004 and previously worked with Gunnallen Financial, Inc.; Brookstone Securities, Inc. (FINRA expelled the firm in 2012); and First Standard Financial Company, LLC.

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June of 2018, the Securities and Exchange Commission (SEC) issued separate but related settled Orders Instituting Administrative Proceedings pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (the “Orders”) against Alexander Capital, L.P., Philip A. Noto II, and Barry T. Eisenberg (collectively, the “Respondents”).

The Commission found that from July 2012 to September 2014, the Respondents failed to reasonably supervise three registered representatives, formerly associated with Alexander Capital, within the meaning of Section 15(b)(4)(E) of the Securities Exchange Act of 1934 (“Exchange Act”) with a view to preventing and detecting those registered representatives’ violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Alexander Capital also failed to reasonably implement certain policies and procedures and permitted a lax compliance environment whereby the registered representatives made unsuitable investment recommendations to their customers, churned their customer’s accounts and engaged in unauthorized trading.

The Commission ordered the Respondents to pay $193,774.86 in disgorgement, $23,436.78 in prejudgment interest, and $228,774.86 in civil money penalties, for a total of $445,986.50, to the Commission. In each of the Orders, the Commission also created a fair fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties collected, along with the disgorgement and prejudgment interest collected, can be distributed to harmed investors.

In addition to the monetary sanctions to both Philip Noto and Barry Eisenberg, the Commission ordered that Eisenberg shall not act in a supervisory capacity with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization; and Eisenberg may apply to act in such a supervisory capacity after five (5) years to the appropriate self-regulatory organization, or if there is none, to the Commission.

For a copy of the SEC Order, click here.

For a copy of Barry Eisenberg’s FINRA BrokerCheck, click here.
For a copy of Philip Noto’s FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.

Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation. Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.