Broker Neil Winterrowd (Winterrowd), formerly of J.P. Turner & Company, LLC (“JP Turner”), has been barred by the Financial Industry Regulatory Authority (FINRA) concerning allegations that from August 12, 2009, through September 21, 2011, Winterrowd misappropriated approximately $1.5 million from at least four different customers and used the funds for his own purposes. FINRA’s action against Winterrowd is the latest in a number of recent actions against brokers formerly associated with JP Turner, many of which highlight allegations of supervisory failures at the firm.
Winterrowd was associated with Crown Capital Securities, L.P. from 2004 through August 2009. In August 2009, Winterrowd transferred to JP Turner until September 21, 2011 at which time he was discharged from JP Turner for improper handling of customer funds. According to Winterrowd’s BrokerCheck, there have been seven customer complaints filed against the broker.
FINRA alleged that Winterrowd provided a variety of financial services to his clients, including annuity products, life insurance, and fixed annuities. According to FINRA, Winterrowd’s customers held brokerage accounts at JP Turner but were also sold products that did not need to be sold through a registered firm. FINRA’s investigation uncovered that Winterrowd misappropriated approximately $1.5 million from at least four different customers. FINRA found that broker accomplished the misappropriations by directing withdrawals from customer accounts to a company under his control. According to FINRA, Winterrowd obtained the funds through partial withdrawals, surrenders, and the proceeds of a death benefit from the annuity products sold to customers. In addition, FINRA alleged that checks were made payable to Annuity Investment Group, an entity owned and controlled by Winterrowd. After funds were deposited in the bank accounts of Annuity Investment Group, FINRA alleged that Winterrowd improperly and without his clients’ knowledge or consent converted funds for his own benefit.
FINRA found that by misappropriating approximately $1.5 million, Winterrowd violated NASD Rule 2330(a) and FINRA Rules 2150(a) and 2010.
JP Turner had an obligation to supervise Winterrowd’s actions and activities. Supervision is a critical component of securities regulation. The supervisory obligations of brokerage firms requires firms to vigorously respond to indications of irregularity, often times referred to as “red flags.” Further, firms must seek out and cannot ignore or disregard red flags to prevent improper activity.
The securities attorneys at Gana LLP have handles claims concerning brokerage firm’s failure to properly supervise and uncover the misconduct of their brokers. Our consultations are free of charge and the firm is only compensated if you recover.