Churning (Excessive Trading)

Broker Investigation: Oppenheimer Advisor Matthew Giannone

November 18, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Matthew Giannone (Giannone) has been the subject of at least 6 customer complaints. The customer complaints against Giannone allege securities law violations that claim churning and excessive trading, unsuitable investments, unauthorized trading, fraud, misrepresentations, and inappropriate loans among other claims. The most recent claim filed against Giannone claims $1,200,000 in damages due to churning and an inappropriate loan. The complaint was denied and closed.

Giannone entered the securities industry in 1997. From June 1997, until June 2005, Giannone was associated with Citigroup Global Markets Inc. From May 2005, until March 2013, Giannone was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Finally, since May 2013, Giannone has been registered with Oppenheimer & Co. Inc. out of the firm’s New York, New York branch office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

FINRA Sanctions Broker Robert Gill Over Borrowing Customer Funds

November 15, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Robert Gill (Gill) has been the subject of at least 9 customer complaints, 2 criminal matters, 2 employment terminations, and 5 regulatory complaints. The customer complaints against Gill allege securities law violations that claim churning and excessive trading, unsuitable investments, breach of fiduciary duty, unauthorized trading, fraud, and misrepresentations among other claims. Gill’s first employment separation in 2003 from Grayson Financial LLC alleged that Gill abused margin, failed to execute trades, engaged in unauthorized trades, and misappropriated firm information. Gill’s second firm termination in October 2013 was due to allegation by J.P. Turner & Company LLC (JP Turner) that Gill borrowed money from a client without prior firm approval.

FINRA’s action against Gill involves the circumstances alleged by JP Turner. FINRA sanctioned Gill by suspending the broker and imposing a fine for allegations involving a loan for $100,000 that he received from a firm customer.

Gill entered the securities industry in 1996. From April 2003, until October 2013, Gill was associated with JP Turner. Since November 2013 Gill has been associated with Chelsea Financial Services out of the firm’s Tinton Falls, New Jersey branch office location.

Broker Investigation: Churning Claims Against Broker Donald Fowler

November 13, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Donald Fowler (Fowler) has been the subject of at least 10 customer complaints. The customer complaints against Fowler allege securities law violations that claim churning and excessive trading, unsuitable investments, breach of fiduciary duty, unauthorized trading, fraud, overconcentration, purchasing securities on margin, and misrepresentations among other claims. At least three of the complaints have been filed in 2015 alone. One complaint alleged that Fowler caused $419,372 in damages.

Fowler entered the securities industry in 2005. From September 2005 until February 2007, Fowler was associated with American Capital Partners, LLC. From January 2007, until November 2014, Fowler was associated with J.D. Nicholas & Associated, Inc. Since November 2014, Fowler has been associated with Worden Capital Management LLC out of the firm’s Garden City, New York office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

FINRA Investigates Broker Craig Taddonio Over Supervision and Churning

October 29, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Craig Taddonio (Taddonio) has been the subject of at least three customer complaints, three judgements or liens, and one regulatory investigation. The Customer complaints against Taddonio alleges securities law violations that claim churning and excessive trading, unsuitable investments, securities fraud, and excessive commissions among other claims. The most recent complaint filed in April 2015, alleges losses of $900,000. In addition, in May 2015, a customer was awarded $338,454 in an arbitration claim including Taddonio where the panel assessed $107,944, $9,871, and $220,639 in compensatory damages against Taddonio and others jointly and severally and also a finding of punitive damages against Taddonio and others jointly and severally under New York law.

In addition to customer complaints Porges is subject to several liens including a massive $574,055 tax lien in February 2015, a $57,735 tax lien in September 2014, and a $48,607 tax lien in September 2014. Tax liens and judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Finally, the brokercheck record also states that on September 29, 2015, FINRA initiated an investigation into Taddonio conduct. The investigation relates to false statements and testimony, violations of FINRA’s supervisory rules and churning.

FINRA Investigates Broker Brent Porges Over Supervision and Churning

October 28, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Brent Porges (Porges) has been the subject of at least four customer complaints, six judgements or liens, and one regulatory investigation. The Customer complaints against Porges alleges securities law violations that claim churning and excessive trading, unsuitable investments, securities fraud, and excessive commissions among other claims. The most recent complaint filed alleges losses of $900,000. In addition, in May 2015, a customer was awarded $338,454 in an arbitration claim including Porges where the panel assessed $107,944 against Porges and others jointly and severally and also a finding of punitive damages against Porges and others jointly and severally under New York law.

In addition to customer complaints Porges is subject to numerous liens including a $7,500 tax lien in March 2015, a $9,000 tax lien in February 2014, a $64,000 tax lien in August 2013, a $5,200 tax lien in December 2012, among other liens. Tax liens and judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Finally, the brokercheck record also states that on September 29, 2015, FINRA initiated an investigation into Porges conduct. The investigation relates to false statements and testimony, violations of FINRA’s supervisory rules and churning.

Former B.B. Graham & Company Broker Russell Macke Barred For Failing to Respond to Regulator Requests

October 20, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Russell Macke (Macke) has been the subject of at least 5 customer complaints, 2 regulatory actions, and 2 employment terminations, and 7 judgment or liens. Customers have filed complaints against Macke alleging securities law violations including poor investment performance, churning and excessive trading, unsuitable investments, and investment fraud among other claims. The judgment and liens include a $38,000 tax lien, a $108,000 tax lien, a $105,000 tax lien, a $1,500 tax lien, a $110,000 tax lien, a $24,000 tax lien, and a $14,000 tax lien. Macke was terminated by John Hancock in 1998 due to claims that the firm was unable to supervise him. In 2012, Macke was terminated from Forsyth Securities, Inc. due to a Missouri consent order and pending FINRA inquiry.

One of the regulatory actions brought against Macke by FINRA alleged that the broker took advantage of his discretionary authority over two customer accounts by engaging in excessive trading and use of margin in those accounts. FINRA found that Macke caused both customers to pay excessive margin interest, commissions and fees and that the amount of trading in the accounts was inconsistent with the customers’ financial circumstances and investment objectives.

One of the customers was alleged to have opened a brokerage account at Forsyth and was 85 years old and living in a nursing home and the account balance was $390,558. The customer used money from the account to pay health care and living expenses. FINRA found that the customer withdrew $55,923 to pay expenses and that Macke was aware of the customers’ use of the account and these withdrawals. The account forms listed annual income of $60,000, a net worth of $600,000, and liquid assets of $380,000. The account form’s risk tolerance was noted as moderate and the investment objectives were growth and income and trading and speculation.

Broker Investigation: Aegis Capital Financial Advisor Edward Jeffery

October 18, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Edward Jeffery (Jeffery) has been the subject of one customer complaint and one regulatory action. The Customers complaint against Jeffery alleges securities law violations that focus primarily on churning and excessive trading. In addition to the churning claims, the customer have complained of unauthorized trading among other claims. In the regulatory action, FINRA alleged that from July 2004 through November 2007, Jeffery effected 682 discretionary transactions in a customer’s accounts without written discretionary authority and without having the customer’s accounts accepted as discretionary accounts in violation of NASD rules. As a result Jeffery was suspended for thirty days and a fine of $10,000.

Jeffery entered the securities industry in 1992 with Paulson Investment Company, Inc until April 2012. Thereafter, from Apirl 2012 until July 2015, Jeffery was a registered representative of JHS Capital Advisors, LLC. Finally, since July 2015, Jeffery has been associated with Aegis Capital Corp. where he remains registered out of the Portland, Oregon office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

Broker Investigation: Aegis Capital Financial Advisor Louis Baudendistel

October 17, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Louis Baudendistel (Baudendistel) has been the subject of at least 4 customer complaints. Customers have filed complaints against Baudendistel alleging securities law violations that focus primarily on churning and excessive trading. In addition to the churning claims, customers have complained of unsuitable investments, breach of fiduciary duty, and negligence among other claims.

Baudendistel entered the securities industry in 1965. From 1983, until August 2010, Baudendistel was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated. From August 2010, until April 2012, Baudendistel was associated with Paulson Investment Company, Inc. Thereafter, from April 2012, until July 2015, Baudendistel was a registered representative of JHS Capital Advisors, LLC. Finally, since July 2015, Baudendistel has been associated with Aegis Capital Corp. where he remains registered out of the Portland, Oregon office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

Gana LLP Investigation: Broker Robert Marks

October 15, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Robert Marks (Marks) has been the subject of at least 2 customer complaints. Customers have filed complaints against Marks alleging securities law violations that focus primarily on churning and excessive trading. In addition to the churning claims, customers have complained of unsuitable investments, negligence, fraud, and unauthorized trading among other claims. One customer complaint focuses on speculative trading in penny stocks.

Marks entered the securities industry in 2000. From August 2008, until October 2009, Marks was associated with GunnAllen Financial, Inc. Thereafter, Marks became associated with Synergy Investment Group, LLC from October 2009, until October 2011. Finally, since September 2011, Marks has been associated with Cape Securities Inc. where he remains registered out of the Coram, New York office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

Customers File Churning Complaints Against Legend Securities Broker Daren Dorval

October 14, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Daren Dorval (Dorval) has been the subject of at least 6 customer complaints, 1 regulatory matter, and one criminal matter over the course of his career. Customers have filed complaints against Dorval alleging securities law violations that focus primarily on churning and excessive trading. In addition to the churning claims, customers have complained of unsuitable investments, negligence, fraud, unauthorized trading, and misrepresentations, among other claims.

According to a 2010 FINRA finding, the regulator alleged that Dorval engaged in unauthorized discretionary trading in a customer account by entering trades based upon the orders of a person related to the customer without appropriate written trading authority.

Dorval entered the securities industry in 2001. From January 2002, until September 2009, Dorval was associated with vFinance Investments, Inc. Thereafter, Dorval became associated with Legend Securities, Inc where he remains registered.