Representative Settles FINRA Charges for Excessive Trading
Commentary by Steven Lofchie
A representative settled FINRA charges for excessive and unsuitable trading in a customer's account.
In a Letter of Acceptance, Waiver and Consent ("AWC"), FINRA determined that between July 2018 and June 2019, the representative recommended more than 130 trades to the customer, who followed these recommendations. FINRA found that prior to these recommendations, the customer's average monthly equity was about $94,000. The trades caused the customer to pay about $42,000 in commissions and other costs during the stated period.
As a result, FINRA found that the individual violated FINRA Rules 2111 ("Suitability") and 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the charges, the individual agreed to restitution of $42,092 plus interest, and a three-month suspension from associating with any FINRA member in all capacities.
Commentary
Running up $42,000 in commissions in a one-year period on a $94,000 account seems akin to theft. A three-month suspension seems insufficient.