Broker David Sheppard (Sheppard) was recently sanctioned by The Financial Industry Regulatory Authority (FINRA) in an enforcement action that led to a permanent bar against the broker. According to BrokerCheck, FINRA found that Sheppard consented to sanctions that he refused to appear for on-the-record testimony requested by FINRA to investigate potential churning (excessive trading) in customer accounts.
The securities lawyers of Gana LLP are also investigating customer complaints against Sheppard. There have been at least three customer complaints against Sheppard, one regulatory action, and two judgements or liens in Sheppard’s 21 year career. The customer complaints against Sheppard allege a number of securities law violations including that the broker made unauthorized trading, and breach of fiduciary duty among other claims.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical 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.