- October 25, 2024
- Newbridge Securities
Baris (Barry) Cabalar (CRD#:4749342) is a registered broker with PHX Financial, Inc., in Fort Lauderdale, FL.
Broker’s History
He entered the securities industry in 2007 and previously worked with Newbridge Securities Corporation; John Thomas Financial (FINRA expelled the firm in 2013); Aegis Capital Corp.; and Legend Securities, Inc. (FINRA expelled the firm in 2017).
Allegations of Misconduct
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on October 16, 2024, the U.S. District Court for the Eastern District of New York issued this Complaint as to Defendant Baris Cabalar. Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against defendant Baris Cabalar (“Cabalar” or “Defendant”) alleges as follows: From January 2019 through October 2021 “Relevant Period”), Cabalar was a registered representative at PHX Financial, Inc. During the Relevant Period, Cabalar recommended to eight retail customers (“Affected Customers”) in their PHX brokerage accounts (“Accounts”) 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. Cabalar’s recommendations to the Affected Customers that they engage in short-term, high-volume trading in their Accounts that he had no reason to believe would be profitable violated Cabalar’s obligation to have a reasonable basis for the investment recommendations he made to his customers. Cabalar made at least one explicit misrepresentation to an Affected Customer, telling him that in around one year, he could recoup $70,000 in losses the Affected Customer had incurred with another broker, without a reasonable basis for saying so, given the trading strategy he recommended. Cabalar consistently solicited customers to trade frequently as part of his short-term, high-volume trading strategy. In making recommendations to all of the Affected Customers, Cabalar implicitly represented to them that he had a reasonable basis for his recommendations, without disclosing that the strategy he recommended was likely to cause losses.
As a result of these recommendations, Cabalar caused the Affected Customers together to lose over $1,000,000 in their Accounts during the Relevant Period. During the Relevant Period, through their improper trading strategies, PHX Financial and Cabalar together made over $400,000 in commissions and fees from the Accounts. Additionally, Regulation Best Interest (“Reg BI”) promulgated under the Securities Exchange Act of 1934 (“Exchange Act”) went into effect on June 30, 2020. Between October 1, 2020, and October 31, 2021 (“Reg BI Period”), Cabalar violated Reg BI by, among other things, failing to act in the best interest of the Affected Customers, by placing the financial or other interests of PHX Financial or himself ahead of the interests of the Affected Customers. Through the conduct alleged herein, the Defendant, directly or indirectly, singly or in concert, violated and is otherwise liable for violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rules 10b-5, 15l-1(a)(1), and 15l-1(a)(2)(ii).
The civil complaint is still pending.
In addition, Baris Cabalar has been the subject of nine other FINRA disclosures:
- June 2024—“ The Securities and Exchange Commission has made a preliminary determination to recommend that the Commission file an enforcement action against, Baris Cabalar. This proposed action would allege violations of Section 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5(a) and (c) and Rule 15l-1 thereunder.”
- December 2019—“Tax Judgment/Lien: $21,473.00.”
- February 2019— “Clients had no history of any complaint at any level prior to this event. Firm received a communication cease and desist letter on 02/27/2019 from clients attorney informing us to contact them on behalf of clients. Additionally the letter informed us of the transfer of client accounts and their review of the accounts activity for potential violations. Specific allegations were made verbally to the firm by attorneys during the month of March, 2019. Allegations covering all account activity between 11/05/2018 & 02/27/2019 were based on excessive trading & commissions.” The damage amount requested was $330,000 and the customer dispute settled for $185,000.
- July 2018—“Tax Judgment/Lien: $74,274.57.”
- March 2016— “Unsuitability, breach of fiduciary duty, common law fraud, breach of contract, churning and violation of the Arkansas Securities Act during 2015.” The customer dispute settled for $5,000.
- February 2015—“ In 2011-2012 alleged churning, unsuitable, breach of contract, breach of fiduciary duty, negligence misrepresentation.” The customer dispute settled for $14,500.
- May 2014—“Tax Judgment/Lien: $15,301.”
- June 2013—“Tax Judgment/Lien: $65,743.”
- January 2009—“ AGGRAVATED UNLICENSED OPERATION OF A MOTOR VEHICLE IN THE FIRST DEGREE IN NEW YORK.” Found not guilty, amended charge to misdemeanor.
For a copy of Baris Cabalar’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.