The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Rasheed a/k/a Richard Adams (Adams) (FINRA No. 2015045911001) resulting in a bar from the securities industry alleging that between July 2013, and June 2014, Adams engaged in unsuitable excessive trading and churning in two of his customers’ accounts. In addition, FINRA alleged that Adams willfully failed to amend his Uniform Application for Securities Industry Registration and Transfer (Form U4) to disclose 12 unsatisfied judgments and liens.
Adams first became associated with a FINRA member in 1997. From May 2002, until August 2010, Adams was associated with E1 Asset Management, Inc. Thereafter, from August 2010, until June 2011, Adams was associated with PHD Capital, Finally, from June 2011, until May 2015, Adams was associated with Caldwell International Securities out of their New York, New York office location. In 2010, Adams created and was the 100% owner of Adams Wealth Management, Inc. (AWM).
According to FINRA, from July 2013, to June 2014, Adams exercised de facto control over two customers’ accounts referred to by the initials “AD” and “PV”. FINRA found that Adams excessively and unsuitably traded and churned AD’s account and PV’s account in a manner that was inconsistent with those customers’ investment objectives, financial situations, and needs. Specifically, FINRA found Adams’ trading activity was inappropriate because it resulted in a turnover rate in AD’s account of 16.14, and a cost-to-equity ratio of 70.99% while in PV’s account the turnover ratio was 19.16 and the cost-to-equity ratio was 91.96%. FINRA found that the improper trading activity in these two accounts resulted in losses of approximately $37,000 and generated commissions of approximately $57,000.
In addition, under the FINRA rules brokers must disclose liens and judgements filed against them. FINRA found that Adams willfully failed to amend or timely amend his Form U4 to disclose 12 judgments and liens including: (1) judgment for $1,104 in favor of Capital One in 2010; (2) lien for $16,771 State of New York in 2010; (3) $1,800 in favor of the Newberry Towne Association in 2010; (4) $18,829 in favor of the State of New York in 2009; (5) lien for $50,441 in favor of the IRS in 2008; (6) $1,781 in favor of the Newberry Towne Association in 2008: (7) lien for $35,609 in favor of the State of New York in 2007; (8) $2,109 in favor of the Newberry Towne Association in 2007; (9) lien for $2,838 in favor of the State of New York in 2006; (10) judgment for $11,478 in favor of Daimler Chrysler Financial Services in 2008; (11) $10,203 in favor of Daimler Chrysler Financial Services in 2008; and (12) $5,000 in favor of Bank of America in 2011.
According to FINRA, Adams knew about each of the judgments and liens. Further, on August 13, 2013, FINRA staff notified Adams about the outstanding judgments and liens were not disclosed on his Form U4. Even though FINRA notified Adams of the judgments and liens, Adams failed to amend his Form U4 to disclose any them until December 3, 2013, which was more than 30 days after Adams learned of the judgments and liens from FINRA.
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.