Securities Lawyers Blog
The investment attorneys at Gana Weinstein LLP are investigating claims against former LPL Financial Broker Jason Anderson (Anderson). A pair of elderly customers are suing Anderson and alleging churning and inflated mutual fund charges.
According to news sources, A pair of elderly customers of LPL Financial are suing the firm and Anderson.
The customers, each of whom are over 65, claim to have suffered a combined $630,000 loss in retirement accounts that were originally valued at $3.5 million.
According to BrokerCheck records, Anderson was discharged from both Kovack Securities and LPL Financial. In May 2016, Anderson was terminated from his position at Kovack Securities following allegations that incomplete signed documents were found during an audit. In January 2016, Anderson was terminated from his position at LPL Financial following allegations he conducted discretionary trading in a brokerage account in violation of firm policy.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades.
Churning is considered a species of securities fraud. The elements of the claim 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.
Anderson entered the securities industry in 2001 and was associated with Edward Jones until 2007. From April 2007 until February 2016, Anderson was associated with LPL Financial LLC. He then moved to Kovack Securities Inc. where he only stayed for 4 months in 2016 (January to May). Finally, Anderson was associated with IFS Securities for less than a year (from May 2016 until April 2017).
In addition, the number of disclosures with respect to Anderson is high relative to his peers. According to news sources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.
Investors who have suffered losses may be able to recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors who have suffered securities losses due to the mishandling of their accounts. 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 we are able to successfully recover on your behalf.