According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker William Brown (Brown), currently associated with Richard James & Associates, INC., has been subject to at least one disclosable event. These events include one customer complaint. Several of those complaints against Brown concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $20,609.34 on April 22, 2022.
Brown was named in a customer complaint that asserted the following causes of action: churning for commissions and quantitative unsuitability (Fraud) Rules 2111 and Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5; unauthorized transactions (Rule 2010); qualitative and quantitative unsuitability (Rule 2111); failure to supervise and negligent supervision (Rule 3010); control person liability; breach of fiduciary contract and implied covenant of good faith and fair dealing; negligent misrepresentation and omissions; standards of commercial honor and principles of trade (Rule 2010).
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. Every month, part of the account are replaced by different securities. The sole purpose of this kind of investment trading activity in the client’s account is to generate commissions that benefit the broker, not the investor. Churning is recognized as a form of securities fraud. The claim consists of: an excessive number of securities transactions, broker control over the account, and fraudulent intent to obtain unlawful commissions from the investor. 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.
Brown entered the securities industry in 2010. Brown has been registered as a Broker with Richard James & Associates, INC. since 2018.
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.