Churning (Excessive Trading)

Advisor James Parrelly Accused of Churning and Sanctioned By Financial Regulator

August 10, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker James Parrelly (Parrelly), formerly associated with Investment Planners, Inc. (Investment Planners), has been subject to at least eight customer complaints, three regulatory complaints, and one employment termination for cause during his career. Several of those complaints against Parrelly concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.

In June 2020, Parrelly was terminated by Investment Planners which alleged that at time of his resignation Parrelly was on heightened supervision and was engaging or had engaged in activities in violation of firm policies and/or FINRA rules, including: (1) use of personal email and texts to communicate with firm clients regarding their accounts; (2) failing to abide by terms of his heightened supervision plan (by continuing to use his personal email and texts and by not providing copies of his personal emails and texts to the firm); and (3) unauthorized trading. Parrelly then resigned in response to the anticipated commencement of an internal review into his activities.

In May 2020, FINRA suspended Parrelly finding that he consented to findings that he executed discretionary transactions in the securities account of a customer pursuant to the customer’s prior verbal authorization, but without written authorization from the customer or written approval from his member firm.

In April 2019 a customer complained that Parrelly violated the securities laws by alleging that Parrelly engaged in sales practice violations related to churning, negligence of duty and unsuitable investments. The claim is currently pending and seeks $500,000 in damages.

Advisor David Weisberg Suspended Over Excessive Trading Charges

June 25, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker David Weisberg (Weisberg), formerly associated with Worden Capital Management LLC (Worden Capital), has been subject to at least four customer complaints and one regulatory action during his career. Several of those complaints against Weisberg concern allegations of unauthorized trading activity and the regulatory action includes allegations of excessive trading also referred to as churning among other securities laws violations.

In April 2020 FINRA filed a regulatory action finding that Weisberg consented to sanctions and findings that he engaged in excessive and unsuitable trading in the account of an elderly customer. FINRA found that Weisberg began soliciting stock trades and some of Weisberg’s recommendations involved in-and-out trading and many of them used margin. FINRA determined that the customer relied on Weisberg’s advice and in virtually every case the customer purchased or sold exactly the quantity of shares that Weisberg suggested. FINRA found that the costs of Weisberg’s trading in the customer’s account were significant and Weisberg did not track the trading costs or take them into consideration when making recommendations. FINRA found that the trading generated commissions of approximately $75,638 while the customer lost approximately $55,627. Finally, FINRA also found that Weisberg used discretion to initiate stock trades in customers’ accounts without written authorization and his member firm who never accepted the accounts for discretionary trading.

In July 2019 a customer complained that Weisberg violated the securities laws by alleging that Weisberg engaged in sales practice violations related to negligence, unsuitability, breach of fiduciary duty, breach of contract, negligent misrepresentation and omissions. The claim is alleges $21,579 and is currently pending.

Network 1 Financial Advisor Carl Antaki Has Churning Complaints

March 23, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Carl Antaki (Antaki), currently associated with Network 1 Financial Securities Inc. (Network 1 Financial), has been subject to at least five customer complaints and one employment termination for cause during his career. Some of the investor complaints against Antaki concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In March 2019 a customer complained that Antaki violated the securities laws by alleging that Antaki engaged in sales practice violations related to unsuitable investments. The claim is currently pending and seeks $100,000 in damages.

In October 2017 a customer complained that Antaki violated the securities laws by alleging that Antaki engaged in sales practice violations related to fraud, misrepresentations, churning and breach of fiduciary duty. The claim settled for $8,750.

Advisor Edward Rudiger Accused of Churning by Multiple Clients

February 25, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Edward Rudiger (Rudiger), currently associated with Reid & Rudiger LLC (Reid & Rudiger), has been subject to at least six customer complaints and one lien or judgement matters during his career. The two most recent complaints against Rudiger concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In October 2019 a customer complained that Rudiger violated the securities laws by alleging that Rudiger engaged in sales practice violations related to false and misleading statements, excessive trading, breach of fiduciary duty and failure to supervise. The claim is currently pending and seeks $220,542 in damages.

In June 2019 a customer complained that Rudiger violated the securities laws by alleging that Rudiger engaged in sales practice violations related to excessive trading and misrepresentation. The claim is currently pending and seeks $279,577 in damages.

Philip Sparacino Barred By Regulator Over Excessive Trading

January 6, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Philip Sparacino (Sparacino), formerly associated with First Standard Financial Company LLC (First Standard), has been subject to at least three customer complaints, one employment termination for cause, two financial disclosures, and two regulatory matters during his career. The majority of the customer complaints against Sparacino concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In November 2019 FINRA entered into a settlement with Sparacino where he consented to the sanction and to the entry of findings that he refused to produce information and documents requested by FINRA while investigating allegations that he engaged in unauthorized, excessive, and unsuitable trading while registered through his member firm. As a result Sparacino was barred from the financial industry.

In October 2019 First Standard terminated Sparacino due to a regulatory action brought by the state of New Jersey that resulted in revoking Sparacino’s license in that state. The state of New Jersey found that Sparacino made untrue statements and omitted information and engaged in practices and a course of business which operated as a fraud or deceit and was otherwise engaged in dishonest and unethical business practices in the sale of securities resulting in a $250,000 fine and a revocation of license. The state alleged that since at least June 2019, Sparacino has engaged in a pattern of unauthorized, excessive, unsuitable, and fraudulent trading activity on behalf of customers of First Standard following the departure of many of First Standard’s agents. Sparacino had access to dozens of newly inherited customer accounts which he used as a vehicle to generate exorbitant commissions at the customers’ expense.

Albert Foronda Has Excessive Trading Complaint

December 24, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Albert Foronda (Foronda), currently associated with Spartan Capital Securities, LLC (Spartan Capital), has been subject to at least three customer complaints and one regulatory investigation during his career. The majority of the customer complaints against Foronda concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In November 2019 FINRA initiated an investigation into Foronda stating that FINRA made a preliminary determination to recommend that disciplinary action be brought against Foronda alleging violations for unauthorized transactions for exercising discretion without written authorization.

In May 2019 a customer complained that Foronda violated the securities laws by alleging that Foronda engaged in unsuitability, excessive trading, and negligence in handling of their account. The claim alleges $650,000 in damages and is currently pending.

In April 2018 a customer complained that Foronda violated the securities laws by alleging that Foronda engaged in breach of fiduciary duty, breach of contract, and negligence in handling of their account. The claim alleges $90,000 in damages and is currently pending.

Alan Appelbaum Accused of Churning and Unsuitable Trading

December 12, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Alan Appelbaum (Appelbaum), currently associated with Aegis Capital Corp. (Aegis), has been subject three regulatory actions and at least thirteen customer complaints. The customer complaints against Appelbaum concern various allegations of misconduct including churning, unauthorized trading, and unsuitable investments among other claims being made against the broker.

In September 2019 a customer complained that Appelbaum violated the securities laws by alleging violations of the securities laws including that from July 2015 through present Appelbaum engaged in unsuitable and unauthorized transactions. The claim does not have a specific damage figure and is currently pending.

In November 2018 a customer complained that Appelbaum violated the securities laws by alleging violations of the securities laws including that from July 2015 through August 2018 Appelbaum engaged in unsuitable recommendations to the client. The claim alleged $1.8 million in damages and is currently pending.

Broker Peter Monson Under Regulatory Investigation For Excessive Trading

November 25, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Peter Monson (Monson), currently associated with Van Clemens & Co. Incorporated (Van Clemens), has been subject to a regulatory investigation by FINRA. The focus of the regulatory investigation is for potential violations of NASD Conduct Rule 2510(b) – Authorization and Acceptance of Account, FINRA Rules 2111 – Suitability, and 2010 – Standards of Commercial Honor and Principles of Trade. This investigation appears to be related to a regulator action FINRA took against his firm Van Clemens concerning allegations of high frequency trading activity also referred to as churning or excessive trading.

FINRA alleged that Van Clemens, from June 1, 2015, through June 30, 2016, failed to establish and maintain a supervisory system reasonably designed to ensure that the firm reviewed transactions in customer accounts for potentially unsuitable excessive trading in order to achieve compliance with FINRA’s suitability rule. FINRA found that the firm’s procedures did not directly address quantitative suitability and, as such, did not set forth a process or identify personnel responsible for reviewing customer accounts for potentially excessive trading.

Accordingly, FINRA determined that Van Clemens did not instruct its supervisors to review account activity for potential excessive trading nor did it train its supervisors to do so. In addition, FINRA found that the firm lacked the necessary tools to even make a determination that excessive trading occurred such as reports for turnover rates or cost-to-equity ratios. FINRA found that a registered representative referred to by the initials “PM”, believed to be Monson, recommended transactions to a firm customer that resulted in the customer’s account having an annualized turnover rate above 9.0 and an annualized cost-equity ratio of 32.3%. FINRA found this activity was excessive, given the customer’s investment objectives and financial situation, and coincided with losses in the account of more than $100,000 during the 13-month period

Trevor Rahn Accused by Multiple Clients of Excessive Trading

October 15, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Trevor Rahn (Rahn), formerly associated with J.P. Morgan Securities LLC (JP Morgan), has been subject to at least four customer complaints, one employment termination for cause, and one judgement or lien during his career. The majority of the customer complaints against Rahn concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In June 2019 a customer complained that Rahn violated the securities laws by alleging that the trading activity increased dramatically and resulted in losses and significant tax obligations. Customer also alleges financial advisor engaged in a pattern of unauthorized trading and margin use in customer’s account in order to generate commissions, and resulting in losses to customer. The claim alleges $854,410 in damages and is currently pending.

In November 2018 a customer complained that Rahn violated the securities laws by alleging that the number of transactions in the account were unauthorized. The overall time period is 03/2014-09/2017. The claim alleges $1,137,915 in damages and settled for $114,000.

In September 2018 JP Morgan discharged Rahn after alleging unacceptable practices relating to the timing and size of orders entered resulting in charges in a client account as well as marking certain orders as unsolicited.

Michael Stanton Subject to Multiple Customer Complaints Over Securities Trading

October 1, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Michael Stanton (Stanton), currently employed by Worden Capital Management LLC (Worden Capital) has been subject to at least four customer complaints, two regulatory complaints, and nine financial disclosures and or tax and civil liens. According to records kept by The Financial Industry Regulatory Authority (FINRA), Stanton’s customer complaints allege that Stanton recommended unsuitable securities and engaged in excessive trading and churning among other allegations of misconduct in the handling of customer accounts.

In November 2016 Stanton was named a respondent in a FINRA complaint alleging that he and his member firm failed to establish, maintain, and enforce a reasonable supervisory system to prevent a registered representative from churning and excessively trading a customer’s brokerage accounts. FINRA alleged that Stanton and the firm failed to adequately investigate red flags demonstrating that the registered representative was churning the customer’s accounts. FINRA found that Stanton and the firm also failed to adequately investigate that the registered representative engaged in aggressive, “in-and-out” trading for no apparent reason – the hallmark of excessive trading and churning. Stanton was suspended for seven months and fined $5,000 as a result.