Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker David Weisberg (Weisberg), previously associated with Worden Capital Management LLC, has been subject to at least 2 disclosable events. These events include one customer complaint, one regulatory event. Several of those complaints against Weisberg concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $47,629.58 on January 15, 2021.
Churning and quantitative unsuitability, misrepresentation and unsuitability. The alleged activity occurred between October\<char_lb_r>\, 2017 and December 2019.
FINRA BrokerCheck shows a final customer complaint on April 22, 2020.
Without admitting or denying the findings, Weisberg consented to the sanctions and to the entry of findings that he engaged in excessive and unsuitable trading in the account of an elderly customer. The findings stated that Weisberg began soliciting stock trades, based on tips from a certain stock-picking website and other sources. Some of Weisberg’s recommendations involved in-and-out trading and many of them used margin. The customer relied on Weisberg’s advice, accepting all of his recommendations. In virtually every case, the customer purchased or sold exactly the quantity of shares that Weisberg suggested. The customer did not make any unsolicited purchases. The costs of Weisberg’s trading in the customer’s account were significant and Weisberg did not track the trading costs or take them into consideration when making recommendations. The trading generated commissions of approximately $75,638 for Weisberg while the customer lost approximately $55,627. The findings also stated that Weisberg used discretion to initiate stock trades in customers’ accounts without written authorization and his member firm never accepted their accounts for discretionary trading.
When brokers engage in churning, or excessive trading, they often rapidly buy and sell securities, sometimes even the same stock repeatedly, within a short span of time. Every month, the account often completely “turns over” with different securities. The sole purpose of this kind of investment trading activity in the client’s account is to generate commissions that benefit the broker, not the investor. Churning is recognized as a form 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 shown 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.
Weisberg has been in the securities industry for more than 9 years. Weisberg has been registered as a Broker with Worden Capital Management LLC since 2016.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.