Excessive-Trading Case Settled, Broker Says

A former co-worker of two San Fernando Valley stockbrokers who allegedly churned the investments of several Southern California cities said he settled federal allegations that he failed to adequately supervise the brokers.

Gary W. Chambers, 47, of Little Rock, Ark., said he reached the settlement with the Securities and Exchange Commission, which made the allegations against him in an administrative proceeding. However, he said the settlement had not yet been formalized by the agency.

Chambers claimed that others were responsible for supervising the traders. The brokers, William E. Parodi Sr. of Woodland Hills and his brother, Frederick W. Parodi of Canoga Park, worked with Chambers at the now-defunct First Investment Securities, a Little Rock-based firm that had a branch office in Woodland Hills.

The SEC alleged that in 1986-87, the brokers generated commissions of at least $1.4 million by excessively trading investments they made for cities such as Lawndale, San Marino and Palmdale, and local government agencies. Their trading also resulted in losses of more than $958,000, the SEC alleged.

In a settlement last October, the Parodi brothers agreed to leave the securities business for life but did not admit to breaking federal securities laws.

Chambers said that under his settlement, he neither admitted nor denied the allegations but agreed not to take a job supervising traders for six months. He said he can otherwise work in the securities business and that he currently is a consultant.