Articles Tagged with excessive trading attorney

shutterstock_24531604-200x300According 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.

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shutterstock_146470052-300x205According 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.

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shutterstock_57938968-200x300According 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.