Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Efrain Trujillo (Trujillo), previously associated with Western International Securities, INC., has been subject to at least 2 disclosable events. These events include one customer complaint, one regulatory event. Several of those complaints against Trujillo concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $30,750.00 on April 02, 2023.
Complaint regarding non-payment of promissory note and potential excessive trading.
FINRA BrokerCheck shows a final customer complaint on October 14, 2022.
Without admitting or denying the findings, Trujillo consented to the sanctions and to the entry of findings that he borrowed approximately $335,000 from firm customers without providing prior written notice or obtaining written approval from his member firm. The findings stated that the customers were retail customers who were not immediate family members of Trujillo or in the business of lending money. The amounts of the loans ranged from $5,000 to $50,000, and Trujillo primarily used the funds to pay for personal expenses. Although Trujillo signed promissory notes memorializing the terms, including repayment schedules, for seven of the 15 loans, he did not provide the customers with promissory notes or repayment schedules for the remaining eight loans. To date, Trujillo has repaid nine of the loans, and he is continuing to repay the remaining six. In addition, Trujillo falsely affirmed on compliance questionnaires that he had never received a loan from his customers.
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. Frequently, the broker flips the account entirely with different securities. The sole purpose of this kind of investment trading activity in the client’s account is to generate commissions that benefit the broker, not the investor. As a deceptive practice, churning falls under the umbrella 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.
Trujillo has been in the securities industry for more than 23 years. Trujillo has been registered as a Broker with Western International Securities, INC. since 2017.
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.