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FINRA charges broker with excessive trading in investors’ accounts

The Financial Industry Regulatory Authority has filed a complaint against a California broker over what it said was excessive trading in the accounts of investors, reports AdvisorHub.

The allegations against Stewart Ginn are from the period between July 2020 and December 2022 when he was a registered representative with Independent Financial Group. (IFG)  Ginn is accused of churning and aggressive trading in the accounts of five investors in violation of FINRA rules, Regulation Best Interest and the Securities Exchange Act of 1934.

“Ginn engaged in frequent in-and-out trades in the five customers’ accounts, while charging high commissions on both buys and sells,” according to FINRA’s complaint. “Ginn’s trading caused the five customers to incur realized losses of more than $2.22 million, while generating more than $2.24 million in commissions for Ginn and IFG.”   He was accused of frequently buying and selling securities without obtaining customer authorization.

Regulators said the customers subjected to the unauthorized and excessive trades included a woman in her late 80s who was suffering from Alzheimer’s disease, a second retired customer in her late 70s, and a third retired customer between 69 and 71 years old. Another of the five clients was the retirement plan of a small dental practice.

According to the complaint, Ginn routinely recommended that the customers buy large equities positions which he then quickly sold, even when the price of the stocks had changed only minimally.  He allegedly continued the excessive trading even as each account incurred substantial losses.  Most of the clients had reportedly cited a moderate risk tolerance for their accounts and did not have experience with short-term stock trading.

FINRA said Ginn’s trading resulted in annualized cost-to-equity ratios of 14% to 27% in the customers’ accounts, making it unlikely they would realize a profit.

FINRA is seeking restitution for the investors involved and disgorgement of all ill-gotten gains.   Ginn’s BrokerCheck report said he disputes the facts relating to the complaint and plans to “contest the charges vigorously.”

The attorneys at Lewitas Hyman understand the complexities that come with being the subject of a regulatory inquiry by the SEC, FINRA and other self-regulatory organizations, and we have the experience to guide and advise you through any type of regulatory investigation. If you are the subject of a regulatory proceeding, contact us at (888) 655-6002 or through our online contact form for a free consultation.