Securities Lawyers Blog
The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that broker Kevin Meadows (Meadows), most recently associated with IBN Financial Services, Inc. (IBN Financial Services) has been subject to at least five customer complaints and two regulatory actions during the course of his career. Meadows has been recently barred by FINRA from acting as a broker. According to records kept by The Financial Industry Regulatory Authority (FINRA), Meadows’s customer complaints alleges that Meadows recommended unsuitable investments in various investments among other allegations of misconduct relating to the handling of their accounts, including churning customer accounts.
In April 2020, a customer complained that Meadows violated the securities laws by alleging that Meadows recommended unsuitable investments and failed to repay a loan. Further, the claim alleged that Meadows engaged in failure to supervise, excessive trading, and breach of fiduciary duty. The damage amount requested was $168,000. The claim settled in the amount of $35,000.
In March 2006, a customer complained that Meadows violated the securities laws by alleging that Meadows engaged in unauthorized trading and use of margin in customer accounts. The damage amount requested was $135,481.71. The matter was settled in a voluntary mediation, without going through arbitration/litigation. The claim settled in the amount of $50,000.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typically 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.
According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases. In addition, research has shown a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints. These lower quality firms may average brokers with five times as many complaints as the industry average.
Meadows entered the securities industry in 1997. Meadows was most recently associated with IBN Financial Services from May 2018 through February 2020, out of the firm’s Liverpool, New York office location. In May 2021, Meadows was barred by FINRA from acting as a broker.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein 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.