According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Eric Nicolassy (Nicolassy), currently associated with Network 1 Financial Securities INC., has been subject to at least 2 disclosable events. These events include one customer complaint, one regulatory event. Several of those complaints against Nicolassy 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 March 24, 2022.
Without admitting or denying the findings, Nicolassy consented to the sanctions and to the entry of findings that he excessively and unsuitably traded a senior customer\\u2019s account. The findings stated that although the customer\\u2019s account had an average month-end equity of $106,293, Nicolassy executed purchases with a total principal value of $5,138,740 which resulted in annualized turnover ratios of more than 23. Collectively, the trades Nicolassy executed caused the customer to pay $71,409.09 in commissions and $10,410 in trade costs and margin interest, which resulted in an annualized cost-to-equity ratio in excess of 76 percent \\u2013 meaning the customer\\u2019s account would have to grow by more than 76 percent annually just to break even. As a result of Nicolassy\\u2019s unsuitable recommendations, the customer suffered more than $125,000 in losses. The findings also stated that Nicolassy exercised discretion in customers\\u2019 accounts without having obtained prior written authorization from the customers.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $103,056.69 on October 04, 2021.
Suitability, Excessive Trading, Unauthorized Trading, Breach of Fiduciary Duty
In a practice known as churning, brokers may execute numerous trades, occasionally involving the same stock, over a brief span. Every month, part of the account are replaced by different securities. The sole beneficiary of this kind of investment trading activity is the broker, who profits from the commissions generated by these trades, which serve no meaningful purpose for the investor. Churning is recognized as a form of securities fraud. The key components of the claim include excessive securities transactions, broker dominance over the account, and an intent to defraud the investor by securing illegal 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.
Nicolassy entered the securities industry in 2014. Nicolassy has been registered as a Broker with Network 1 Financial Securities INC. since 2020.
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.