Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing financial advisors and brokers who’ve churned their accounts. FINRA, the U.S. securities industry regulator, suspended and fined broker Sebastian Wyczawski, while he was registered with Joseph Stone Capital of Manorville, New York, between June 2016 and January 2017. The broker allegedly engaged in “excessive and unsuitable trading” in the account of an unidentified customer, according to Financialadvisoriq.com.
In addition, between September 2016 and September 2017, Wyczawski also allegedly engaged in excessive and unsuitable trading in the account of another customer FINRA identifies as “Customer 2,” placing 45 trades. FINRA and other regulators consider turnover rates of six or more and cost equity ratios of 20% (an industry metric measuring overtrading) or more as conclusory evidence of excessive trading. Wyczawski consented to a five-month suspension and to pay a $5,000 fine as well as restitution of $21,644 plus interest, all without admitting or denying the findings, FINRA stated.
Two months ago, Wyczawski left Joseph Stone for VCS Venture Securities, in Mineola, New York, according to BrokerCheck, which also notes Wyczawski has two customer disputes on his record, both settled. One, from 2004, sought $75,000 for allegations of unauthorized transactions and was settled for half that amount. The second, from 2018, sought $250,000 over allegations of negligence, unsuitability and overconcentration, among other violations, and was settled for $17,500, according to BrokerCheck.
Chris Kelly, deputy head of FINRA enforcement, said that the self-regulator “will continue its vigilances against excessive trading because it’s just a very tempting violation for brokers who earn commissions.” Brokers have clear financial incentives to overtrade and churn accounts since they earn a commission from every transaction. As a result, churning is one of the most frequent industry abuses and the subject of countless arbitration claims against bad brokers and their firms.
Note: Brokers are not allowed to trade without your explicit written permission unless you give them “discretionary” authority over your account, which often opens the door to overtrading and other abuses. As broker-advisors under FINRA rules, they are not considered “fiduciaries,” a more rigorous standard that legally compels them to act in your best financial interest. Lawyers, certified public accountants, and registered investment advisors generally represent clients as fiduciaries. However, brokers, financial advisors, and their firms are duty-bound to follow securities industry rules, laws, and regulations. Churning/Excessive trading violates numerous securities rules and regulations, and in fact, is considered a fraudulent practice under both state and federal securities acts. As such, they can be sued for investment losses sustained as a result of excessive trading or churning.
If you invested with a broker-advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!
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