The securities attorneys at Gana Weinstein LLP are investigating claims against Western International Securities, Inc. (Western International) broker Jorey Bernstein (Bernstein). According to BrokerCheck records, Bernstein has been subject to one pending customer complaint regarding excessive trading.
In August 2018, a customer alleged that from 2009 to 2014, Bernstein excessively traded their account. The customer requested damaged of $3,000,000. This dispute is currently still pending.
In addition, Bernstein has been subject to resignation from Morgan Stanley in 2015 due to customer allegations regarding Bernstein’s illegal interactions and outside business activities with a third-party. A broker’s outside business activities with a third-party can create a conflict of interest with the firm. Therefore, firms are required to monitor such activities through supervision that is in compliance with securities laws and regulations.
When brokers engage in excessive trading, the broker will typical trade in and out of securities many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This investment trading shows no purpose except to generate commission for the broker. Churning is considered a species of securities fraud which can occur through excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. Similarly, excessive trading involves just the first two elements under FINRA’s suitability rule, but not the third element. Certain ratios are used to calculate the extent of churning and excessive trading of an account. 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.
A brokerage firm owes a duty to supervise to all of its customers to properly monitor and supervise its employees. Supervisors have an obligation to respond “red flags”, otherwise known as indications of irregularity. A supervisor cannot ignore or disregard red flags and must act decisively to detect and prevent improper activity.
Bernstein has been in the securities industry for 23 years and has been registered with Western International since 2015. From June 2009 to December 2015, Bernstein was registered with Morgan Stanley. From October 2005 to June 2009, Bernstein was registered with Citigroup Global Markets Inc. From August 1998 to September 1999, Bernstein was registered with The Investment Center, Inc.
Investors who have suffered losses may be able recover their losses through securities arbitration. The investment attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.