According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Todd Henrich (Henrich) has been hit with a couple customer complaints this year. Henrich’s record reveals a total of 2 customer complaints in his short four year career. Customers have filed complaints against Henrich alleging securities law violations including that the broker made unsuitable investments, churning, negligence, breach of fiduciary duty, and misrepresentations among other claims. Both claims have been filed against the broker since July 2015.
Henrich entered the securities industry in 2011 and became associated with National Securities Corporation (National Securities). In December 2011, Henrich became associated with Obsidian Financial Group, LLC until December 2012. At that time Henrich again became associated with National Securities and has been associated with that brokerage firm ever since.
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 Henrich 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.