Broker Investigation: Advisor Scott Sibley Churning Claims

shutterstock_13267522According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Scott Sibley (Sibley) has been hit with a large number of customer complaints. Sibley’s record reveals a total of 14 customer complaints. However, in 2015 alone 10 of those complaints have been filed. Sibley has also been the subject of one employment separation and one regulatory action over the course of his career. Customers have filed complaints against Sibley alleging securities law violations including that the broker made unsuitable investments, churning, breach of fiduciary duty, negligence, and breach of contract among other claims.

Sibley entered the securities industry in 1994. Since November 2007, until March 2015, Sibley was registered with Raymond James & Associates, Inc. Since March 2015, Sibley has been associated with Moors & Cabot, Inc. out of their Boca Raton, Florida office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.

The number of complaints and regulatory actions against Sibley is relatively large by industry standards. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters.

Investors who have suffered investment losses due to churning activity may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors concerning securities violations. Our consultations are free of charge and the firm is only compensated if you recover.