excessive trading attorney

William Athas of SW Financial Sanctioned By FINRA Over Churning

September 8, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that broker William Nicholas Athas (Athas), currently employed by SW Financial has been subject to at least nine customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Athas’s customer complaints alleges that Athas recommended unsuitable investments in various investments among other allegations of misconduct relating to the handling of their accounts.

In January 2022, FINRA barred Athas finding that Athas willfully violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and violated FINRA Rule 2020 by churning customer accounts.

In May 2020, a customer complained that Athas violated the securities laws by alleging that Athas engaged in unsuitable trading, common law fraud, churning. The claim alleges $84,932.35 in damages and is currently pending.

In January 2017, a customer complained that Athas violated the securities laws by alleging that Athas engaged in misrepresentations, breach of fiduciary duty, breach of contract, negligence, unauthorized trading, and violations of Texas State Securities Act. The damage amount requested was $290,000. The claim settled in the amount of $95,000.

In July 2011, a customer complained that Athas violated the securities laws by alleging that Athas engaged in churning and excessive trading. The damage amount requested was $100,000. The claim settled in the amount of $10,000.

Adviser Ezri Shechter Alleged of Churning and Sanctioned by Regulator

April 13, 2021 | by Staff Attorney

Adviser, Ezri Shechter, was previously employed at Spencer-Winston Securities Corporation. (Spencer-Winston), has been subject to at least five customer complaints over the course of his career with these claims alleging violations such as suitability, churning, and unauthorized trading. Most notably, Ezri has been suspended and fined by the Financial Industry Regulatory Authority (FINRA) for unauthorized trading activity.

Since May 2000 through December 2010, there have been three customer complaints against Shechter which cumulatively settled for over $170,000. Additionally, there have also been allegations of unauthorized trading against Shechter. The most recent unauthorized trading allegation occurred in June 2020 and sought damages of $25,000. Shechter’s unauthorized trading activity resulted in a three-month suspension and $12,500 fine by FINRA.

According to a BrokerCheck report, Shechter consented to “[causing] multiple customers of his member firm to sign blank or incomplete discretionary trading forms that he then copied and used to complete discretionary trading forms. The findings stated that Shechter submitted the forms with the photocopied signatures to his firm as originals, causing the firm to make and keep inaccurate books and records regarding the granting of discretionary authority.”

Philip Sparacino Barred By Regulator Over Excessive Trading

January 6, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Philip Sparacino (Sparacino), formerly associated with First Standard Financial Company LLC (First Standard), has been subject to at least three customer complaints, one employment termination for cause, two financial disclosures, and two regulatory matters during his career. The majority of the customer complaints against Sparacino concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In November 2019 FINRA entered into a settlement with Sparacino where he consented to the sanction and to the entry of findings that he refused to produce information and documents requested by FINRA while investigating allegations that he engaged in unauthorized, excessive, and unsuitable trading while registered through his member firm. As a result Sparacino was barred from the financial industry.

In October 2019 First Standard terminated Sparacino due to a regulatory action brought by the state of New Jersey that resulted in revoking Sparacino’s license in that state. The state of New Jersey found that Sparacino made untrue statements and omitted information and engaged in practices and a course of business which operated as a fraud or deceit and was otherwise engaged in dishonest and unethical business practices in the sale of securities resulting in a $250,000 fine and a revocation of license. The state alleged that since at least June 2019, Sparacino has engaged in a pattern of unauthorized, excessive, unsuitable, and fraudulent trading activity on behalf of customers of First Standard following the departure of many of First Standard’s agents. Sparacino had access to dozens of newly inherited customer accounts which he used as a vehicle to generate exorbitant commissions at the customers’ expense.

Former Broker Paul Soll Barred from the Securities Industry

September 20, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating advisor Paul Soll (Soll), formerly registered with Western International Securities, Inc. (Western International) and Financial West Group (FWG) out of Los Angeles, California. According to records kept by The Financial Industry Regulatory Authority (FINRA), Soll was barred from the financial industry for failing to provide the regulator with information about his trading activities that concern possible excessive trading a securities law violation that is similar to churning. According to a BrokerCheck report, Soll also disclosed at least one customer complaint alleging breach of fiduciary duty.

In July 2018, FINRA stated that Soll violated FINRA Rules 8210 and 2010 by failing to provide the regulator with information about his potential trading abuses. Soll was thereby barred from the securities industry.

Moreover, a customer filed a complaint alleging that Soll engaged in breach of fiduciary duty, breach of contract, and misrepresentation in the sale of bonds. The amount of damages was not specified. The claim settled for $660,574.

William Brunner Barred From Securities Industry After Allegations of Excessive Trading

October 10, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker William Brunner (Brunner) has been subject to five customer complaints, one bankruptcy, two regulatory actions, and one termination for cause. Brunner was formerly registered with Investment Planners, Inc. (Investment Planners) until May 2017. Many of the customer complaints against Brunner concern allegations of high frequency trading activity also referred to as churning, unauthorized trading, and unsuitable investments.

In April 2018 FINRA barred Brunner from the industry stating that Brunner consented to the sanction and declined to appear for on-the-record testimony requested by FINRA in connection with an investigation into excessive trading and use of discretion without written authorization in customers’ accounts. In May 2017 Investment Planners terminated Brunner claiming that allegations were made by a client concerning unauthorized trading.

In June 2017 a customer filed a complaint claiming that Brunner engaged in negligence, breach of fiduciary duty, churning, unauthorized trading, and unsuitable investments claiming $1,000,000 in damages. The claim was settled.

Erik Pica Subject to Multiple Customer Complaints Over Unauthorized Trading

October 8, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Erik Pica (Pica) has been subject to three customer complaints. Pica is currently registered with Joseph Stone Capital L.L.C. (Joseph Stone). Many of the customer complaints against Pica concern allegations of high frequency trading activity also referred to as churning, unauthorized trading, unsuitable investments, and speculative investment strategies.

The last customer complaint occurred in May 2018 when a customer alleged unauthorized trading in Rite Aid and Valeant Pharmaceutical leading to $7,613 in damages. The claim is currently pending.

Also in May 2018 another customer alleged negligent supervision, overconcentration, and unsuitable investments causing $293,000 in damages. The claim is currently pending.

In March 2018 another customer alleged $500,000 after claiming that Pica engaged in unsuitable investments, churning, and other claims. The claim is currently pending.

Mark Kaplan Barred by Regulator Over Churning a Customer Account

August 24, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former Vanderbilt Securities, LLC (Vanderbilt Securities) broker Mark Kaplan (Kaplan) has been subject to eight disclosed customer complaints, one employment termination for cause, and one regulatory action resulting in an industry bar. Many of the customer complaints against Kaplan allege churning or excessive trading.

In March 2018, FINRA found that Kaplan violated the securities laws and FINRA rules by churning and engaging in unsuitable excessive trading in the brokerage accounts of a senior customer. FINRA found that Kaplan exercised de facto control over the customer’s accounts and the customer relied on Kaplan to direct investment decisions in his accounts. In addition, FINRA found that the elderly customer was experiencing a decline in his mental health and had a court allow the nephew to act as his legal guardian and manage his financial affairs after he was diagnosed with dementia. Nonetheless, FINRA found that Kaplan effected more than 3,500 transactions in the customer’s accounts resulting in approximately $723,000 in trading losses while generating approximately $735,000 in commissions and markups for Kaplan. FINRA claimed that Kaplan never discussed with the customer the extent of his losses or the amount paid in sales charges and commissions. In sum, FINRA found that this level of trading was excessive and unsuitable for the customer given his investment profile, including his age, risk tolerance, and income needs.

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.