Broker Devin McCabe (McCabe), currently employed at Laidlaw & Company (UK), LTD. (Laidlaw), has been subject to at least one customer complaint during the course of his career. Additionally, McCabe has also been subject to a tax lien. His most recent customer complaint alleges churning, excessive trading, and unsuitable trading. According to a BrokerCheck report, in May 2018, a client alleged that McCabe was engaging in churning, unauthorized trading, and making unsuitable investment recommendations from 2015 through 2017. This matter settled for approximately $10,000.00. Additionally, in June 2017, McCabe disclosed a tax lien in the amount of $16,453.20.
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.
Furthermore, Large tax liens on a broker’s CRD can be a red flag that the broker may be influenced to engage in high commission activity in order to satisfy personal debts. FINRA discloses information concerning a broker’s financial condition because a broker’s inability to handle their own personal finances has also been found to be material information in helping investors determine if they should allow the broker to handle their finances.
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.
McCabe entered the securities industry in 2009. From March 2009 through August 2009, McCabe was registered with Emmet A Larkin Company, Inc. From 2009 through 2013, McCabe was registered with Sterne Agee Financial Services, Inc. From 2013 through 2017, McCabe was registered with Laidlaw. From 2017 through 2019, McCabe was registered with Westpark Capital, Inc. McCabe returned to Laidlaw in August 2019.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to excessive trading and suitability 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.