Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Stewart Ginn (Ginn), currently associated with Independent Financial Group, LLC, has been subject to at least 5 disclosable events. These events include 3 customer complaints, 2 regulatory events. Several of those complaints against Ginn 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 23, 2025.
On August 29, 2024, the Financial Industry Regulatory Authority (‘FINRA’) issued an Order Accepting Offer of Settlement accepting Ginn’s Offer of Settlement wherein, without admitting or denying the allegations, Ginn consented to the entry of findings and violations alleging that, among other things, from July 2020 and December 2022, Ginn violated the Best Interest Obligation under Rule 151-1(a) of the Exchange Act and violated FINRA Rule 2010 by excessively trading five customers’ accounts, including three customers who were retired seniors; engaging in frequent in-and-out trades in the customers’ accounts while charging high commissions on both buys and sells, resulting in the customers incurring realized losses of more than $2.22 million and Ginn and his firm generating more than $2.24 million in commissions; and improperly trading at least four of the customers’ accounts on discretion and frequently buying and selling securities in the accounts without obtaining customer authorization for each transaction; and\<char_lb_r>\, WHEREAS, pursuant to the Order Accepting Offer of Settlement, Ginn was suspended from association with any FINRA member firm in any capacity for a period of eighteen (18) months, fined $50,000, and ordered to pay restitution in the amount of $115,000 plus interest.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $1,618,000.00 on December 14, 2023.
Statement of Claim contains allegations of breach of fiduciary duty, negligence, negligent misrepresentation, negligent supervision, breach of contract, churning, excessive trading, fraud and deceit, and unfair business practices/unfair competition.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $250,000.00 on October 19, 2023.
Alleges investment was not suitable
FINRA BrokerCheck shows a final customer complaint on October 17, 2023.
Ginn was named a respondent in a FINRA complaint alleging that he churned and excessively traded customer accounts. The complaint alleges that none of the customers was an aggressive investor, one of the customers was in her late 80s and suffering from a cognitive disability; a second retired customer was in her late 70s; and a third retired customer was between 69 and 71 years old. Ginn engaged in frequent in-and-out trades in the customer accounts, while charging high commissions on both buys and sells. Ginn’s trading caused the customers to incur realized losses of more than $2.22 million, while generating more than $2.24 million in commissions for Ginn and his member firm. Ginn routinely recommended that the customers buy large equities positions, which he often quickly sold, even when the price of the stocks had changed only minimally. Because of the high commissions Ginn charged-generally three percent on buy transactions and two percent on sell transactions-the customers routinely incurred losses on such trades. Acting with scienter and with de facto control over the customer accounts, Ginn churned these accounts in willful violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and in violation of FINRA Rule 2020. By excessively trading the accounts of retail customers, Ginn willfully violated the Best Interest Obligation under Rule 15l-1(a)(1) of the Exchange Act (Regulation BI). The complaint also alleges that Ginn recommended a series of transactions to one of the customers that was excessive and quantitatively unsuitable in light of the customer’s investment profile. The complaint further alleges that in a majority of the customer accounts, Ginn improperly traded on discretion and frequently engaged in buying and selling securities without obtaining customer authorization for each transaction. Disregarding the cumulative impact of his excessive, high-cost trading, Ginn persisted in placing frequent trades in each of the customers’ accounts, even as each account incurred substantial realized losses. Ginn’s trading resulted in annualized cost-to-equity ratios (or break-even points) of between 14 percent to 27 percent in the customers’ accounts, making it unlikely they would realize a profit.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $1,400,000.00 on September 15, 2023.
Alleges investments were not suitable in light of Claimant’s age
Should a broker participate in excessive trading, or churning, they may repeatedly buy and sell securities, occasionally even the same stock, within a short span of time. Every month or a few months, the account could be completely replaced with new 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 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.
Ginn entered the securities industry in 2002. Ginn has been registered as a Broker with Independent Financial Group, LLC since 2015.
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.