Securities Lawyers Blog
Broker, Chadwick Carrick (Carrick), currently employed at The Jefferey Matthews Financial Group, LLC, has been subject to at least two customer complaints and one employment termination for cause over the course of his career. The two most recent occurring in 2018. According to a BrokerCheck report, the customer complaints include churning, allegations of unsuitable investments, unauthorized trading, and altering a journal form and a letter of authorization.
As of January 2018, there is a matter pending for allegations made by a client against Carrick for, among other things, churning and breach of fiduciary duty. Additionally, in September 2018, another client alleged that Carrick made unsuitable investments and engaged in unauthorized trading. This matter settled for $35,000. Moreover, in 2009, Carrick was discharged from Morgan Stanley after working there for five years for altering a journal form and a letter of authorization previously signed by the client.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typically trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful 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.
Unauthorized trading occurs when a broker sells securities without the prior consent from the investor. All brokers, who do not have discretionary authority to trade an account, are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). Under the NASD Conduct Rule 2510(b), a broker is prohibited from trading in a non-discretionary customer account without prior written authorization from the customer. Unauthorized trading is a type of investment fraud because the Securities Exchange Commission (SEC) has found that disclosures of trades being made are essential and material to an investor. Unauthorized trading is often a gateway violation to other securities violations including churning, unsuitable investments, and excessive use of margin.
Carrick entered the securities industry in 1988. From 1988 through 2004, Carrick was registered with A.G. Edwards & Sons, Inc. From 2004 through 2009, Carrick was registered with Morgan Stanley and ultimately discharged for violating the firm’s policies and procedures as stated above. From 2009 through 2015, Carrick was registered with Sterne, Agee, & Leach, Inc. From 2015 through 2017, Carrick was registered with Stifel, Nicolaus & Company, Inc. Currently, Carrick is registered at the Jeffrey Mathews Financial Group, LLC.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to excessive trading and churning violations. Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.