FINRA Suspends Former Branch Manager for Supervisory Failures Linked to Excessive Trading and Churning
From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï
A former regional branch manager at a broker-dealer has agreed to Financial Industry Regulatory Authority (FINRA) sanctions after the regulator found that he failed to supervise registered representatives who engaged in excessive trading and churning of customer accounts.
According to FINRA's Acceptance, Waiver, and Consent (AWC) letter, the firm's registered representatives excessively traded 114 customer accounts, including 53 accounts belonging to senior investors. As ThinkAdvisor reports, FINRA found that the misconduct generated nearly $10 million in trading costs and caused approximately $8 million in investment losses. The regulator also determined that 35 of those accounts were churned.
FINRA further concluded that excessive trading permeated the firm's business model. According to ThinkAdvisor, the order states that more than $46 million, or nearly two-thirds of the firm's trading revenue, came from more than 1,200 customer accounts that displayed clear indicators of excessive trading.
FINRA determined that the respondent held direct supervisory responsibility over the registered representatives involved in the misconduct. FINRA found the supervisor regularly reviewed daily trade blotters and monthly exception reports that repeatedly identified the same customer accounts and brokers for unusually high trading activity, according to ThinkAdvisor. The supervisor accepted the findings of the AWC without admitting or denying them.
FINRA suspended the former branch manager for 18 months from associating with any FINRA member firm in all principal capacities. FINRA also imposed a $15,000 fine, payable if the respondent seeks to reenter the securities industry.
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Tags: eccleston, eccleston law, finra sanctions, failure to supervise, excessive trading, churning, broker-dealer regulation





