The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Flower (Flower). According to BrokerCheck records Flower has been the subject of at least four customer complaints and one bankruptcy that was disclosed in January 2016. The customer complaints against Flower allege a number of securities law violations including that the broker made unsuitable investments, excessive use of margin, and churning (excessive trading) 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. 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.
An examination of Flower’s employment history reveals that Flower moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Flower’s 18 year career he has worked at least 15 different firms. What’s more astonishing is that seven of those firm’s have been expelled from the industry by FINRA and in many instances for securities laws violations for mistreating their customers.
In addition, the number of customer complaints against Flowers is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters.
Flowers entered the securities industry in 1997. From August 2009 through November 2009, Flowers was associated with Brookstone Securities, Inc. From October 2009 until November 2010, Flowers was associated with Prestige Financial Center, Inc. From November 2010 until May 2014, Flowers was associated with Global Arena Capital Corp. From May 2014 until December 2015, Flowers was registered with Laidlaw & Company (UK) Ltd. Finally, since December 2015 Flowers has been associated with Salomon Whitney Financial out of the firm’s Farmingdale, New York office location.
The investment fraud attorneys at Gana Weinstein LLP represent investors who have suffered securities losses due to the mishandling of their accounts. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.