According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Donald Fowler (Fowler), previously associated with Worden Capital Management LLC, has been subject to at least 4 disclosable events. These events include 2 customer complaints, 2 regulatory events. Several of those complaints against Fowler concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.
FINRA BrokerCheck shows a final customer complaint on August 25, 2021.
Without admitting or denying the findings, Fowler consented to the sanction and to the entry of findings that he churned and excessively traded four customers’ accounts. The findings stated that while exercising de facto control over the customers’ accounts, Fowler recommended excessive activity and his customers routinely followed his recommendations. Fowler’s trading in the customers’ accounts was excessive and, with reckless disregard for the customers’ interests, conducted to maximize his commissions. Fowler employed an investment strategy that entailed short-term in-and-out trades and he used margin as a means to increase the buying power in his customers’ accounts. Fowler’s trading of the four accounts resulted in high turnover rates and cost-to-equity ratios. The customers paid a total of $949,356 in commissions and suffered $1,095,778 in losses. Therefore, Fowler willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and violated FINRA Rules 2111, 2020, and 2010.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $1,277,631.00 on August 09, 2021.
Churning and violations of SEC Rule 10b-5; qualitative and quantitative unsuitablity; breach of fiduciary contract; negligent\, misrepresentations and omissions; and violations of FINRA Rule 2010. Alleged activity occurred between September 2015 and\, September 2019.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $27,410.00 on November 19, 2020.
Churning and Qualitative and Quantitative Unsuitability; Breach of Fiduciary Duty; Breach of Contract; Negligent Misrepresentation and Omissions. Activity was between March 2017 through October 2017.
FINRA BrokerCheck shows a final customer complaint on March 31, 2020.
SEC Admin Release 34-88529, March 31, 2020: The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (‘Exchange Act’) against Donald J. Fowler. On January 9, 2017, the Commission brought a civil injunctive action against, among others, Fowler, in the United States District Court for the Southern District of New York. The Commission’s complaint alleged that Fowler recommended to customers a pattern of high cost, in-and-out trading without any reasonable basis to believe that his recommendations were suitable for anyone. The Commission’s complaint also alleged that Fowler’s recommendations resulted in losses for the customers and ill-gotten gains for Fowler; that Fowler churned customer accounts; and that Fowler made unauthorized trades. On June 20, 2019, a jury in the above-mentioned civil action (Securities and Exchange Commission v. Donald J. Fowler, Civil Action Number 17-CV-139 (S.D.N.Y. )), found that Fowler violated Section 17(a) of the Securities Act of 1933 (‘Securities Act’) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. On February 28, 2020, a final judgment was entered against Fowler, permanently enjoining him from future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Donald J. Fowler, Civil Action Number 17-CV-139 (S.D.N.Y. ).
When brokers engage in churning, or excessive trading, they often rapidly buy and sell securities, sometimes even the same stock repeatedly, within a short span of time. The account could frequently “turnover” entirely within a short timer with new securities. The only purpose of this investment trading activity in any client’s account is to generate commissions that benefit the broker, not the investor. In the realm of securities law, churning is classified as a type of fraud. The fundamental aspects of the claim involve excessive securities transactions, the broker’s undue influence over the account, and an intention to defraud the investor for illegal financial gain. 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.
Fowler has been in the securities industry for more than 13 years. Fowler has been registered as a Broker with Worden Capital Management LLC since 2014.
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.