FINRA Sanctions Broker Robert Gill Over Borrowing Customer Funds

shutterstock_20354401According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Robert Gill (Gill) has been the subject of at least 9 customer complaints, 2 criminal matters, 2 employment terminations, and 5 regulatory complaints. The customer complaints against Gill allege securities law violations that claim churning and excessive trading, unsuitable investments, breach of fiduciary duty, unauthorized trading, fraud, and misrepresentations among other claims. Gill’s first employment separation in 2003 from Grayson Financial LLC alleged that Gill abused margin, failed to execute trades, engaged in unauthorized trades, and misappropriated firm information. Gill’s second firm termination in October 2013 was due to allegation by J.P. Turner & Company LLC (JP Turner) that Gill borrowed money from a client without prior firm approval.

FINRA’s action against Gill involves the circumstances alleged by JP Turner. FINRA sanctioned Gill by suspending the broker and imposing a fine for allegations involving a loan for $100,000 that he received from a firm customer.

Gill entered the securities industry in 1996. From April 2003, until October 2013, Gill was associated with JP Turner. Since November 2013 Gill has been associated with Chelsea Financial Services out of the firm’s Tinton Falls, New Jersey branch 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 customer complaints against Gill is high relative to his peers. 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. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Gana LLP represents investors who have suffered investment losses due to broker wrongdoing, such as churning and unsuitable investments. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.