According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Douglas Bevers (Bevers) has been the subject of at least five customer complaints, two regulatory actions, and one employment separation. The customer complaints against Bevers allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading), among other claims. The employment separation resulted from allegations that Bevers violated firm policies by allowing a third party to direct orders without obtaining permission from the client in writing.
Bevers entered the securities industry in 1973. From July 2003, until February 2014, Bevers was associated with Boenning & Scattergood, Inc. Thereafter, from February 2014, till present Bevers has been registered as a broker with Coastal Equities, Inc.
All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. Many of the claims against Bevers involving claims of unauthorized trading, churning, and excessive trading.
Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. The broker must first discuss all trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature.
Unauthorized trading often accompanies claims of churning, or investment trading activity in the client’s account serves no reasonable purpose for the investor and is transacted 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.
The number of complaints and regulatory actions against Bevers is relatively large by industry standards. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must disclose different types of events, not necessarily all of which are customer complaints. These disclosures can include IRS tax liens, judgments, and even criminal matters.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases where their broker has acted inappropriately. Our consultations are free of charge and the firm is only compensated if you recover.