November 18, 2020
On September 30, 2020, general securities representative Donatas Vildzius consented to sanctions imposed by the Financial Industry Regulatory Authority (FINRA) Department of Enforcement to resolve allegations of excessively trading two customers’ accounts.
Vildzius has been associated with three FINRA member firms based in Connecticut within the last ten years: 1) Source Capital Group, Inc. in Westport from April 2006 to July 2009; 2) Rockwell Global Capital LLC in Danbury from November 2009 to April 2015; and 3) Network 1 Financial Securities Inc. in Danbury from March 2015 to May 2019.
FINRA alleges in the AWC that between August 2015 and April 2017, Vildzius excessively and unsuitably traded two customers’ accounts by exercising de facto control over both customers’ accounts and using a short-term, active trading strategy, including in-and-out trading. This trading activity resulted in high turnover rates and cost-to-equity ratios and significant losses. Once customer had an IRA account with an objective of “growth” and a moderate risk tolerance, and another customer had the same objective for his individual account.
According to the AWC, the first customer’s account experienced an annualized turnover rate of 6.42 and cost-to-equity ratio of 50.6%, while the second customer’s account exhibited an annualized turnover rate and cost-to-equity ratio of 4.58 and 41.3%, respectively. The turnover rate refers to the amount of securities bought and sold in the account compared to its value. The cost-to-equity-ration is how well the account would have to perform to break even. So, Vildzius would have had to have more than 50% and 41% returns in the accounts just to break even. Because of this alleged misconduct, the customers experienced $26,694 and $32,240 in losses and paid $25,956 and $7,493 in commissions and fees, respectively.
Without admitting or denying the allegations made against him, Vildzius consented to a six-month suspension from associating with any FINRA member firm in any capacity and a $5,000 fine.
Vildzius’ FINRA BrokerCheck report reveals numerous regulatory disclosures and customer disputes. In 2004, a customer received $95,000 to settle claims that he committed unauthorized trading and churning in her account. In 2006, Wachovia Securities in St. Louis, Missouri discharged Vildzius after a customer complained of unauthorized margin trading. The National Association of Securities Dealers (NASD) subsequently imposed a 30-day suspension, $9,000 fine, and $16,000 restitution payment to resolve allegations from this customer’s complaint.