July 21, 2021
Christopher Orlando recently entered into an Acceptance, Waiver, and Consent (AWC) settlement with FINRA for excessively trading 13 accounts of 12 customers in violation of FINRA Rules 2111 and 2010 from October 2015 through December 2018. During that time he was registered through Legend Securities and then Worden Capital Management.
Excessive trading is shown through the turnover rate and cost-to-equity ratio of an account. Turnover rate represents the number of times that a portfolio of securities is exchanged for another portfolio of securities. The cost-to-equity ratio measures the amount an account has to appreciate just to cover commissions and other expenses. In other words, it is the break-even point where a customer may begin to see a return. An annualized turnover rate of six or an annualized cost-to-equity ratio above 20 percent generally indicates that excessive trading has occurred.
During the relevant period, Orlando allegedly engaged in excessive trading in 13 customer accounts held by a total of 12 customers (one customer held two accounts). Orlando recommended high frequency trading in the 13 customer accounts, and he often recommended the sale of one security and the simultaneous investment of the sale proceeds into a new security within short time periods. Orlando’s customers routinely followed his recommendations and, as a result, Orlando exercised de facto control over the customers’ accounts. Orlando’s trading of the 13 accounts resulted in high turnover rates and cost-to-equity ratios as well as significant losses of $483,680, while paying total trading costs of $581,216, including commissions of $496,872.
According to FINRA, Orlando violated FINRA Rules 2111 and 2010 and, therefore, barred him from associating with any FINRA member in all capacities.
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