According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Jay Shah (Shah) has been subject to five customer complaints. Shah is currently registered with National Securities Corporation (National Securities). In May 2017 a customer filed a complaint alleging a number of securities law violations including that the broker engaged in churning (excessive trading), material misrepresentations and omissions, and unsuitable recommendations, among other claims. The claim alleged $213,085 in damages and is currently pending.
In August 2015 another customer complained that Shah rendered poor investment advice claiming $100,000 in damages. The claim was closed. In March 2012 another customer claimed that Shah engaged in unauthorized trading in the customer’s account The claim was closed.
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.
The number of complaints against Shah are unusual compared to his peers. According to newsources, 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.
Shah entered the securities industry in 2003. From July 2006 until December 2012 Shah was associated with vFinances Investments, Inc. Since November 2017 Shah has been associated with National Securities out of the firm’s New York, New York office location.
At Gana LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.