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.
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.
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 show 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.
Rahn entered the securities industry in 1992. From July 2010 until September 2018 Rahn was registered with JP Morgan out of the firm’s Los Angeles, California office location.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to excessive trading and churning violations. Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.