Reply to DHB industries Case Study by Nicholas Woghiren
Mark Gamber
Liberty University School of Business
Author’s Note
Mark T. Gamber
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Mark Gamber
at mgamber1@liberty.edu
Although Nicholas Woghiren’s Introduction was good there should have been more
background on the company. In the mid-1980s, Jeffrey Brooks, David Brooks’ brother and best
friend, founded a small brokerage firm, Jeffrey Brooks Securities. Jeffrey recruited David to join
the firm and become his right-hand man. In 1992, the two brothers became targets of the
Securities and Exchange Commission (SEC) when one of their subordinates was charged with
insider trading. The SEC alleged that the Brooks brothers had failed to establish proper control
procedures to prevent their subordinates from improperly using material non-public information
obtained from their clients.
The firm was fined $405,000, and the SEC filed separate injunctions against the brothers.
The SEC banned David Brooks from serving as a director, officer, or employee of a brokerage
firm or an investment company for five years. This injunction however did not prohibit him from
serving as an executive of an SEC registrant that was other than a brokerage or investment
company. A few months before the SEC sanctioned the Brooks brothers, David, with the
financial backing of his brother, organized a small company based in Westbury, New York. That
company, DHB Capital Group, Inc., which was subsequently renamed DHB Industries, Inc.
(DHB is David Brooks’ initials), was intended to serve as the umbrella organization for a
