According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Lon Faccini (Faccini), previously associated with Tsg Capital Advisors, has been subject to at least 2 disclosable events. These events include one customer complaint, one regulatory event. Several of those complaints against Faccini 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 February 16, 2023.
Without admitting or denying the findings, Faccini consented to the sanctions and to the entry of findings that he engaged in excessive and unsuitable trading, including using margin, in customers’ accounts. The findings stated that Faccini recommended that the customers place trades in their accounts, most of which were executed using margin for one of the customers and all were executed using margin for the other customer. Both customers routinely accepted Faccini’s recommendations. Although the customer’s account had an average month-end equity of approximately $116,900 for 19 months, Faccini recommended purchases with a total principal value of approximately $2,410,300, which resulted in an annualized turnover rate in the account just over 13. As a result of Faccini’s unsuitable recommendations, that customer had a loss of approximately $36,700. Collectively, the trades that Faccini recommended caused that customer to pay approximately $55,389 in commissions and fees and another $12,997 in margin interest for a total of approximately $68,385. In addition, although the other customer’s account had an average month-end equity of approximately $26,856 for 16 months, Faccini recommended purchases with a total principal value of approximately $522,438, which resulted in an annualized turnover rate in the account of 14.59. As a result of Faccini’s unsuitable recommendations, the other customer had a loss of approximately $17,395. Collectively, the trades that Faccini recommended caused the other customer to pay approximately $16,074 in commissions and fees and another $2,696 in margin interest for a total of approximately $18,770.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $453,406.47 on November 22, 2022.
Suitability, Churning
When brokers indulge in excessive trading, often called churning, they typically buy and sell securities, sometimes even the same stock, repeatedly over a short span of time. Every month, the account often completely “turns over” with different securities. The sole purpose of this kind of investment trading activity in a client’s account is to generate commissions that benefit the broker, not the investor. Churning is regarded as a specific category of securities 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.
Faccini has been in the securities industry for more than 26 years. Faccini has been registered as a Broker with Tsg Capital Advisors since 2024.
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.