Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Daniel O’neill (O’neill), previously associated with Aegis Capital Corp., has been subject to at least 2 disclosable events. These events include one customer complaint, one regulatory event. Several of those complaints against O’neill 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 July 29, 2021.
O’Neill was named a respondent in a FINRA complaint alleging that he excessively and unsuitably traded one of his customer’s accounts. The complaint alleges that O’Neill exercised de facto control over the trading in the customer’s account, controlling the volume and frequency of trading, deciding what securities to buy and sell, the quantities, the price, and when each trade would occur. O’Neill also exercised control when he executed unauthorized trades in the customer’s account. The trading in the customer’s account was also excessive when measured against the annualized turnover rate and cost-to-equity ratio. O’Neill’s intentional, active trading caused the customer to incur $140,109 in costs and $147,411 in losses, while generating substantial commissions for O’Neill. O’Neill’s trading generated gross sales credits and commissions of $110,446, of which O’Neill received at least $66,000. O’Neill did not have a reasonable basis to believe that the level of trading he recommended was suitable for the customer. The complaint also alleges that O’Neill effected trades in the customer’s account without first obtaining authorization or consent for the trades from the customer.
FINRA BrokerCheck shows a settled customer complaint on February 03, 2021.
Time frame: unspecified. Claimant alleges unsuitable investments.
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. Often times the account will completely “turnover” every month 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. In the realm of securities law, churning is classified as a type of fraud. The fundamental aspects of the claim involve excessive securities transactions, the broker’s undue influence over the account, and an intention to defraud the investor for illegal financial gain. 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.
O’neill has been in the securities industry for more than 36 years. O’neill has been registered as a Broker with Aegis Capital Corp. since 2013.
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.