The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Lance Slater (Slater). According to BrokerCheck records there are at least 2 customer complaints against Slater and one employment separation. The most recent customer complaint against Slater alleges that from 2013 Slater borrowed $210,000 from the client and then tried to hide that fact from her children and has not since then paid the client back. The client also alleges that Slater engaged in unsuitable investments and excessive trading.
Shortly thereafter Morgan Stanley discharged Slater making allegations Slater failed to adhere to the firm’s guidance regarding certain sales activity and possible involvement in an unreported loan from a customer while at a prior firm.
As a background, 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.