Mack Miller Sanctioned by Regulator Over Excessive Trading Claim

shutterstock_140321293-200x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Mack Miller (Miller), associated with Spartan Capital Securities, LLC (Spartan Capital) has been subject to at least three customer complaint, one regulatory action, and three judgement or liens during his career.  The complaint against Miller concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.

In April 2020, FINRA found that Miller consented to sanctions and findings that he engaged in quantitatively unsuitable trading in the account of a customer who was over 79 years old and retired. FINRA determined that Miller actively traded the customer’s account resulting in a high turnover rate, cost-to-equity ratio, and significant losses. FINRA found that the trading was unsuitable given the customer’s investment profile.  Further, the costs of the trading strategy, in the form of commissions and fees, made it difficult for the customer to profit from the trading. The trading FINRA describes included instances of Miller purchasing and selling securities within a few days resulting in thousands of dollars of losses after subtracting the associated sales charges. The customer was found to have lost $69,633 from the trading.

In April 2017, brokerage firm Dawson James Securities terminated Miller when he called a prospective customer in a state where he was not registered to conduct business in.

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.

According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined.  Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases.  In addition, research has show a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints.  These lower quality firms may average brokers with five times as many complaints as the industry average.

Miller entered the securities industry in 2004.  An examination of Miller’s employment history reveals that Miller moves from troubled firm to troubled firm.  The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry.  Over 16 years Miller has been associated with a 21 different broker-dealers.  Many of these firm’s have been expelled from the industry by FINRA and in many instances for securities laws violations for mistreating their customers.  From August 2015 until November 2015, Miller was registered with Viewtrade Securities, Inc.  From November 2015 until May 2016 Miller was associated with Lampert Capital Markets Inc.  From May 2016 until April 2017 Miller was associated with Dawson James Securities, Inc.  Finally, since April 2017, Miller has been registered with Spartan Securities out of the firm’s New York, New York office location.

At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to excessive trading and churning violations.  Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation.  Claims may be brought in securities arbitration before FINRA.  Our consultations are free of charge and the firm is only compensated if you recover.

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