Articles Posted in Churning (Excessive Trading)

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shutterstock_177082523-243x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Anthony Sica (Sica) has been subject to three regulatory actions and nine customer complaints.  Sica is currently registered with Joseph Gunnar & Co. LLC (Joseph Gunnar).  The most recent regulatory action filed against Sica was in January 2018 by the Maryland Securities Commissioner who alleged that when it inquired about information provided to the state Scia agreed to withdraw his registration request.  Many of the customer complaints against Sica concerning high frequency trading activity also referred to as churning.

In Novemebr 2017, FINRA found that Sica unsuitable recommendations to an elderly customer living on a fixed income. FINRA alleged that Sica repeatedly recommended that the customer purchase high-risk securities that were inconsistent with her investment profile and resulted in an over concentration of the customer’s account in speculative securities.  FINRA also found that Sica engaged in short-term in-and-out trading of the speculative investments in the customer’s accounts causing substantial losses. FINRA alleged that Sica also engaged in unauthorized trading by placing trades in the IRA accounts of a customer who Sica knew was deceased.  FINRA suspended Sica for three months.

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shutterstock_20354401-300x200The investment attorneys at Gana Weinstein LLP are investigating a customer complaint against Garden State Securities broker Dave Nicolas (Nicolas).

According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), A customer alleged in June 2016 that Nicolas engaged in unsuitable investments and churning and alleged failure to supervise on the part of Garden State Securities, Inc.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation, the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

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shutterstock_103681238-300x300The investment lawyers at Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Luigi Mancusi (Mancusi).

According to BrokerCheck records, Mancusi allegedly “exercised discretion in effecting 45 transactions in a customer’s accounts without prior written authorization from the customer to exercise discretion in these accounts and without the accounts having been approved for discretionary trading by his member firm.” Further, Mancusi allegedly executed three transactions in another customer’s account without prior authorization. Reportedly, “Mancusi sold the security and used the proceeds to purchase two other securities in the customer’s account to replace it. As a result, the customer incurred fees, commissions, and ultimately a loss in disposing of an unwanted purchase into a new position, totaling $2,966.97.” Mancusi has been suspended from the securities industry for two months and has been fined $10,000.

Mancusi has also received five customer complaints.

In November 2017, a customer alleged Mancusi placed the customer in unsuitable investments for their age and risk tolerance and they were placed in unauthorized investments. This dispute is currently pending.

In July 2015, a customer alleged unauthorized transactions took place in the customer’s accounts. This dispute settled for $60,000.

In July 2013, multiple customers alleged unsuitability, breach of fiduciary duty, negligent misrepresentation and failure to supervise. This dispute settled for $50,000.
In October 2009, a customer alleged Mancusi misrepresented material facts related to an unsuitable investment as well as unauthorized investments. This dispute settled for $80,000.

In September 2002, a customer alleged she instructed to Mancusi to purchase a fixed annuity and she was sold a variable annuity after Mancusi did not follow her instructions. This dispute settled for $30,000.

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shutterstock_102242143-300x169According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Donald Devito (Devito) has been subject to 10 customer complaints.  Devito was formerly registered with Wells Fargo Advisors (Wells Fargo).  In December 2016 Wells Fargo terminated Devito claiming that the firm had concerns over the level of trading in client accounts.  In 2016 through 2017 Devito has had six complaints filed against him concerning the level of trading and fees generated in his accounts.  Customers have filed complaints alleging a number of securities law violations including that the broker engaged in churning (excessive trading), unauthorized trading, and unsuitable recommendations among other claims.

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shutterstock_20354401-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Patrick Maddren (Maddren) has been subject to two customer complaints and two tax liens.  Maddren is currently registered with WestPark Capital, Inc. (WestPark Capital).  In March 2016 a customer filed a complaint alleging a number of securities law violations including that the broker engaged in churning (excessive trading), material misrepresentations and omissions, unauthorized trading, unsuitable recommendations, and breach of contract among other claims.  The claim alleged $1,000,000 in damages and is now settled.

In 2012 several tax liens were filed against Maddren in amounts totaling over $300,000.  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.  In addition, a broker’s inability to manage their own finances is relevant in a customer’s decision to use their services.

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shutterstock_85873471-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Leon Rehak (Rehak) has been subject to two customer complaints.  Rehak is currently registered with LPL Financial LLC (LPL Financial).  In November 2016 a customer filed a complaint alleging a number of securities law violations including that the broker made engaged in churning (excessive trading), unauthorized trading, and breach of fiduciary duty among other claims.  The claim alleged $600,000 in damages and is currently pending.

In October 2017, another customer filed a complaint alleging Common Law Fraud, Common Law Negligent Misrepresentation, Breach of Fiduciary Duty, Negligence, Suitability, and Excessive Trading from May 2011 through September 2017.  The claim alleged $499,000 in damages and is currently pending.

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shutterstock_184430612-300x225According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Frank Giacalone (Giacalone) has been subject to two customer complaints.  Giacalone is currently registered with Aegis Capital Corp. (Aegis).  In June 2016 a customer filed a complaint alleging a number of securities law violations including that the broker made engaged in churning (excessive trading), unauthorized trading, and breach of fiduciary duty among other claims.  The claim alleged $128,319 in damages and was settled.

In June 2015, another customer filed a complaint alleging unsuitable investment recommendations and claiming $107,969 in damages.  The claim was settled.

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.  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.

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shutterstock_153667934-300x200The investment attorneys at Gana Weinstein LLP are investigating claims against former LPL Financial Broker Jason Anderson (Anderson). A pair of elderly customers are suing Anderson and alleging churning and inflated mutual fund charges.

According to news sources, A pair of elderly customers of LPL Financial are suing the firm and Anderson.

The customers, each of whom are over 65, claim to have suffered a combined $630,000 loss in retirement accounts that were originally valued at $3.5 million.

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shutterstock_123758422-300x200Gana Weinstein LLP is investigating claims made by Financial Industry Regulatory Authority (FINRA) against broker David Menashe (Menashe). According to BrokerCheck records, Menashe was ordered to pay a restitution of $15,000 by the state of Montana for alleged excessive trading and unauthorized trading in June 2016.

Menashe entered the industry in 2009. He is currently registered and employed at Newbridge Securities, where he has been employed since January 2017. His past employment includes:

• Joseph Stone Capital LLC (February 2013 – January 2017)

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shutterstock_180341738-200x300According to BrokerCheck records Terry Brodt (Brodt) has been sanctioned by The Financial Industry Regulatory Authority (FINRA) over allegations that, while associated with Garden State Securities, Inc. (Garden State) the broker exercised discretion in a customer’s account without obtaining written authorization or written approval of the account as discretionary from his brokerage firm.  FINRA found that Brodt exercised discretion in accounts maintained by customers without written authorization and without approval from Garden State to treat those customer accounts as discretionary. FINRA also found that Brodt provided inaccurate responses about his use of discretion in connection with his firm’s annual compliance questionnaires.

In addition, to the FINRA sanctions Brodt has been subject to five customer complaints, two financial disclosures including a bankruptcy filing in July 2016, and ten judgment or tax liens.  Some of the complaints against Brodt allege securities law violations including that the broker engaged in churning (excessive trading) and unauthorized trading among other claims.

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