A supervisor with California-based Independent Financial Group (IFG) is being penalized over excessive trading by one of his brokers, Advisor Hub reports.
The Financial Industry Regulatory Authority fined IFG’s Vice President of Supervision Richard Mireles $5,000 and suspended him for four months. The matter stems from the case of Stewart “Paxton” Ginn, a broker who was suspended for 18 months, fined $50,000 and ordered to pay $115,000 in restitution for churning five customers’ accounts. FINRA said Ginn generated more than $2.24 million in commissions while causing $2.22 million in losses for the five customers, one of whom was in her late 80s and suffering from Alzheimer’s
According to a settlement reached with FINRA, it was alleged that Mireles failed to “reasonably respond” to red flags about the excessive trading by Ginn. Regulators said that from July 2020 to December 2022, IFG’s automated compliance systems repeatedly generated alerts about the broker’s trading in all of the accounts.
At least two lower-level supervisors raised concerns over this to Mireles, but he instructed them to perform “only trade-by-trade assessments” to ensure the recommendations were suitable and “not to review the series of trades…for potential excessive trading.”
Mireles was found to be in violation of FINRA Rule 2010, requiring high standards of commercial honor and just and equitable principles of trade, and FINRA Rule 3110, requiring a supervisory system designed to achieve compliance with applicable securities laws and regulations
Mireles’ lawyer, Alan Wolper of UB Greensfelder in Chicago, declined to comment. A spokesperson for San Diego-based IFG did not return a request for comment.
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