February 5, 2021
A Registered representative who is currently associated with Worden Capital Management, LLC (WCM) in Garden City, New York, recently submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) Department of Enforcement to resolve allegations of violating securities industry rules and regulations for failing to supervise two former registered representatives that engaged in a pattern excessive and unsuitable trading.
FINRA Department of Enforcement alleges in the AWC that the branch manager and principal responsible for supervising registered representatives at its Rockville Centre location, failed to act on multiple red flags of misconduct by the branch owners who also conducted securities business with customers. The branch owners allegedly identified customers with speculative investment objectives and recommended short-term trading strategies to them. WCM placed the branch owners under heightened supervision due to their history of excessive trading, unsuitable use of margin, and churning.
The branch owners’ customers incurred millions of dollars in losses over a three year period on top of paid commissions. Between December 2014 and December 2017, one branch owner churned and excessively traded seven customers’ accounts. The customers incurred over $1.8 million in losses, while paying nearly $530,000 in commissions. Between January 2015 and December 2017, the other branch owner churned and excessively traded four customers’ accounts, in which the customers incurred nearly $1.2 million in losses, while paying over $940,000 in commissions.
Based on the foregoing the Worden registered representative violated FINRA Rules 3110 and 2010 by failing to reasonably investigate the red flags or take meaningful action to intervene and stop the misconduct by the branch owners.
Without admitting or denying the allegations made against him, the representative consented to a three-month suspension from associating with any FINRA member in any principal capacity and a $5,000 fine. He also consented to completing 20 hours of continuing education concerning supervisory responsibilities.
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