FINRA Suspends Broker for Excessive Trading

FINRA suspended a broker for recommending excessive trades in the accounts of two senior customers. 

According to the AWC, the broker engaged in excessive trading in the accounts of two 66-year-old customers. 

FINRA found that the broker recommended 20 transactions in one retiree's account, resulting in an annualized turnover rate of six and a cost-to-equity ratio of 30 percent. FINRA stated that this activity generated $6,905 in commissions and caused $13,542 in realized losses. FINRA concluded that the level of trading in the customer's account was "excessive" and not in the customer’s best interest.

FINRA found that the broker recommended 31 transactions in the second customer's account producing an annualized cost-to-equity ratio of 24 percent. FINRA found that the trading generated $25,325 in commissions and resulted in $57,480 in realized losses. FINRA concluded that the level of trading recommended in the customer's account was "excessive," unsuitable, and not in the customers best interest. 

FINRA determined that the broker violated Exchange Act Rule 15l-1 ("Regulation Best Interest") and FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 2111 ("Suitability"). 

The broker consented to a nine-month suspension from associating with any FINRA member in any capacity. FINRA noted that, due to the broker’s demonstrated inability to pay, no monetary sanctions were imposed.