churning attorney

James Pecoraro Sanctioned by Regulator Over Excessive Trading

October 4, 2022 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker James Pecoraro (Pecoraro), associated with Spartan Capital Securities, LLC (Spartan Capital) has been subject to at least 11 customer complaint, six regulatory actions, and one judgement or liens during his career. Some of the complaints against Pecoraro concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.

In August 2022, FINRA found Pecoraro consented to sanctions and findings that he excessively traded in customers’ accounts. FINRA found that Pecoraro recommended a pattern of high-cost and high-velocity trading in the customers’ accounts. FINRA alleged that Pecoraro’s customers routinely followed his recommendations and exercised de facto control over their accounts. The findings state that Pecoraro effected a total of 325 trades resulting in annual turnover rates ranging from 13.47 to 57.97 and annualized cost-to-equity ratios ranging from 57.58 percent to 175.19 percent. FINRA found that Pecoraro’s trading was excessive and unsuitable for the customers’ investment profiles and the customers suffered losses of $166,018, total trading costs of $184,053, and commissions of $165,437.

Advisor Edward Rudiger Accused of Churning by Multiple Clients

February 25, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Edward Rudiger (Rudiger), currently associated with Reid & Rudiger LLC (Reid & Rudiger), has been subject to at least six customer complaints and one lien or judgement matters during his career. The two most recent complaints against Rudiger concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In October 2019 a customer complained that Rudiger violated the securities laws by alleging that Rudiger engaged in sales practice violations related to false and misleading statements, excessive trading, breach of fiduciary duty and failure to supervise. The claim is currently pending and seeks $220,542 in damages.

In June 2019 a customer complained that Rudiger violated the securities laws by alleging that Rudiger engaged in sales practice violations related to excessive trading and misrepresentation. The claim is currently pending and seeks $279,577 in damages.

Trevor Rahn Accused by Multiple Clients of Excessive Trading

October 15, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Trevor Rahn (Rahn), formerly associated with J.P. Morgan Securities LLC (JP Morgan), has been subject to at least four customer complaints, one employment termination for cause, and one judgement or lien during his career. The majority of the customer complaints against Rahn concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In June 2019 a customer complained that Rahn violated the securities laws by alleging that the trading activity increased dramatically and resulted in losses and significant tax obligations. Customer also alleges financial advisor engaged in a pattern of unauthorized trading and margin use in customer’s account in order to generate commissions, and resulting in losses to customer. The claim alleges $854,410 in damages and is currently pending.

In November 2018 a customer complained that Rahn violated the securities laws by alleging that the number of transactions in the account were unauthorized. The overall time period is 03/2014-09/2017. The claim alleges $1,137,915 in damages and settled for $114,000.

In September 2018 JP Morgan discharged Rahn after alleging unacceptable practices relating to the timing and size of orders entered resulting in charges in a client account as well as marking certain orders as unsolicited.

Laidlaw’s Peter Viglione Subject to Multiple Churning Complaints

June 10, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Peter Viglione (Viglione) has been subject to at least four customer complaints during his career. Viglione is currently employed by Laidlaw & Company (UK) Ltd. (Laidlaw). The majority of the customer complaints against Viglione concern allegations of high frequency trading activity also referred to as churning.

In May 2018 a customer filed a complaint alleging that Viglione violated the securities laws by, among other things, that Viglione’s activities from 2015 through 2017 caused $20,179 in damages. The claim settled.

In May 2018 a customer filed a complaint alleging that Viglione violated the securities laws by, among other things, that Viglione engaged in unauthorized trading and excessive trading from 2015 through 2016 caused $200,000 in damages. The claim is currently pending.

In July 2012 a customer filed a complaint alleging that Viglione violated the securities laws by, among other things, that Viglione engaged in unauthorized trading, excessive trading, and misrepresentations causing $780,000 in damages. The claim was settled for $125,000.

IFS Securities Advisor Thomas Williams Subject to Churning Claims

January 10, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Thomas Williams (Williams) has been subject to five customer complaints and one termination for cause during his career. Williams is currently employed by IFS Securities. Several of the the customer complaints against Williams concern allegations of high frequency trading activity also referred to as churning and unsuitable investments.

In October 2018 a customer filed a complaint alleging their account was excessively traded, churning, and unsuitable investments. The claim alleged $50,000 in damages and is currently pending.

In August 2010 Williams was terminated by First Allied Securities, Inc. (First Allied) in connection with allegations that a customer complained over unsuitable investments, misrepresentation, and breach of fiduciary duty.

Worden Capital Financial Advisor Michael Rosalia Subject to Customer Complaints

September 25, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) Worden Capital Management LLC (Worden Capital) broker Michael Rosalia (Rosalia) has been subject to six disclosed customer complaints, eight tax liens or judgements, and two financial disclosures including bankruptcy. Many of the customer complaints against Rosalia allege churning or excessive trading.

In June 2013 Rosalia declared bankruptcy. Such disclosures on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. FINRA discloses information concerning a broker’s financial condition because a broker’s inability to handle their own personal finances has also been found to be material information in helping investors determine if they should allow the broker to handle their finances.

In May 2018 a customer filed a complaint alleging Rosalia engaged in churning, improper use of margin, unsuitability and high commissions. The complaint alleged $503,828 in damages and has been settled.

Larry Boggs Barred by FINRA from Industry for Executing Unauthorized Trades

July 5, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), in January 2018, advisor Larry Boggs (Boggs) was barred indefinitely from the financial industry by FINRA concerning allegations that he engaged in unsuitable investments, excessive trading and unauthorized transactions. According to FINRA, Boggs exercised discretion in customer accounts without written approval from customers or the firm. Boggs would also allegedly falsely state the investment objectives and risk tolerance of customers in the firm’s books so that customers would conform to his high-frequency trading strategy.

FINRA found that in June 2010, Boggs updated the risk tolerance in 4 investment portfolios from Moderate to Moderate/Aggressive, and changed 2 investment portfolio objectives to Aggressive. FINRA determined that the high-frequency trading strategy was unsuitable to his customer’s needs and did not match the customer’s investment portfolio objectives. By changing Ameriprise’s books and records, Boggs violated FINRA Rules 4511 and 2010.

In addition, in May 2015, Boggs’ employer, Ameriprise Financial Services, Inc. (Ameriprise Financial) discharged Boggs alleging that Boggs violated the company’s discretionary trading and suitability policies.

The SEC Bars Daniel Fischer for Unsuitable Churning In Customer Accounts

July 2, 2018 | by Staff Attorney

The investment fraud attorneys at Gana Weinstein LLP are currently investigating previously registered broker Daniel Fischer (Fischer). According to BrokerCheck, in January 2018, the Securities Exchange Commission (SEC) barred Fischer from the financial industry claiming that from December 2012 to May 2015, Fischer recommended an unsuitable investment strategy in penny stocks to 5 customers and falsely represented and omitted material facts about the strategy. In addition, the SEC alleged that Fischer was engaging in churning of accounts and in unauthorized trading. The SEC found that as a result of recommending unsuitable investments, Fischer had violated federal laws including Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5.

In addition, Fischer has also been subject to one regulatory action and one civil action in which the SEC and the Federal Industry Regulative Authority (FINRA) sanctioned Fischer for various violations of the securities laws.

In July 2016, FINRA suspended Fischer on the grounds that he was exercising discretion in customer accounts without prior customer approval. As a result of violating NASD Conduct Rule 2510(b) and FINRA Rule 2010, Fischer incurred a fine of $5,000 and a suspension of 20 days.

Jorey Bernstein Subject to a Pending Customer Complaint Alleging $3,000,000 in Damages

June 25, 2018 | by Staff Attorney

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.

Anthony Sica Subject to Multiple Regulatory Sanctions and Customer Complaints

June 9, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Anthony Sica (Sica) has been subject to three regulatory actions and nine customer complaints. Sica is currently registered with Joseph Gunnar & Co. LLC (Joseph Gunnar). The most recent regulatory action filed against Sica was in January 2018 by the Maryland Securities Commissioner who alleged that when it inquired about information provided to the state Scia agreed to withdraw his registration request. Many of the customer complaints against Sica concerning high frequency trading activity also referred to as churning.

In Novemebr 2017, FINRA found that Sica unsuitable recommendations to an elderly customer living on a fixed income. FINRA alleged that Sica repeatedly recommended that the customer purchase high-risk securities that were inconsistent with her investment profile and resulted in an over concentration of the customer’s account in speculative securities. FINRA also found that Sica engaged in short-term in-and-out trading of the speculative investments in the customer’s accounts causing substantial losses. FINRA alleged that Sica also engaged in unauthorized trading by placing trades in the IRA accounts of a customer who Sica knew was deceased. FINRA suspended Sica for three months.

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.