According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Johnny Guan (Guan), previously associated with Aegis Capital Corp., has been subject to at least 2 disclosable events. These events include 2 customer complaints. Several of those complaints against Guan concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.
FINRA BrokerCheck shows a settled customer complaint on August 25, 2021.
Excessive trading
FINRA BrokerCheck shows a settled customer complaint with a damage request of $125,820.12 on April 26, 2021.
Time frame: December 2012 – November 2020. Claimants allege unsuitable investment recommendations.
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. Frequently, the broker flips the account entirely with 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. Securities regulators consider churning to be a distinct form of investment fraud. The claim is based on excessive securities trading, the broker’s control over the account, and a fraudulent scheme to extract 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.
Guan has been in the securities industry for more than 14 years. Guan has been registered as a Broker with Aegis Capital Corp. since 2016.
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.