According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker William Athas (Athas), previously associated with Sw Financial, has been subject to at least 2 disclosable events. These events include one customer complaint, one regulatory event. Several of those complaints against Athas 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 January 18, 2022.
Athas was named a respondent in a FINRA complaint alleging that he willfully violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and violated FINRA Rule 2020 by churning customer accounts. The complaint alleges that Athas controlled the trading in the customer accounts, the volume and frequency of trading in the accounts, decided what securities to buy and sell, the quantity of each transaction, and the timing of each transaction. Athas also determined the commission he would charge for each transaction. The customers routinely followed Athas\\u2019 recommendations. Athas deliberately incurred unreasonably high trading costs in these customers\\u2019 accounts, which made it virtually impossible for the accounts to be profitable. Athas persisted in his trading activity even after being warned about the excessive level of trading and high costs in these customer accounts on several occasions. The complaint also alleges that Athas\\u2019 trading in these accounts was excessive and quantitatively unsuitable for each of the customers based on their investment profiles, as evidenced by the high turnover rates and cost-to-equity ratios, the frequency of the transactions, and the transaction costs incurred. Athas\\u2019 churning and excessive trading caused the customers to pay approximately $1.6 million in commissions and other trading costs and to suffer approximately $1.1 million in losses. Conversely, Athas generated commissions of approximately $1.5 million for himself and his member firms. The complaint further alleges that Athas recommended that the customers engage in short-term, in-and-out trading, often on margin, without having a reasonable basis to recommend that trading strategy to his customers. Athas\\u2019 recommended strategy therefore was not suitable. Athas failed to perform reasonable diligence to understand the cumulative costs of his trading, including commissions, other trading costs, and margin interest. Athas also failed to perform reasonable diligence to understand the impact of these cumulative costs on the value of his customers\\u2019 accounts or the ability of his customers to earn a profit. Athas also failed to understand turnover rates and cost-to-equity ratios, and therefore failed to calculate and consider these metrics when recommending and executing a short-term, in-and-out trading strategy in his customers\\u2019 accounts.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $84,932.35 on May 04, 2020.
Unsuitable trading; common law fraud; churning; breach of contract; negligent supervision; breach of fiduciary duty. Dates of activity 5/2/2019 to 4/23/2020.
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. Every month or a few months, the account could be completely replaced with new 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 considered a species 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.
Athas has been in the securities industry for more than 22 years. Athas has been registered as a Broker with Sw Financial 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.