Madison Avenue Securities Hit With $1.67 Million for Churning Case

According to a recent InvestmentNews article, Madison Avenue Securities was hit with a $1.67 million fine in compensatory and punitive damages because of the actions of broker David Barber. Mr. Barber was ordered to pay $1.2 million to Donna Gambee, while the firm was ordered to pay the rest. The Financial Industry Regulatory Authority (FINRA) found Barber and Madison Avenue liable for churning, unauthorized trading, unsuitable trading, breach of fiduciary duty and failure to supervise. These are all against securities laws. In 2013, FINRA suspended Barber for four months and fined him $25,000 for improperly receiving five loans totaling $867,000 from several of his clients when he was affiliated with Raymond James. He concealed the loans from the firm by routing them through an outside business he owned. He was terminated from the firm in 2011. Churning is a particularly egregious form of misconduct, and is when the broker trades in and out of securities, sometimes in the same day. It typically results in losses for the client and unnecessary fees, while the broker gains commissions.
According to his FINRA online record, Mr. Barber was previously registered with Birr, Wilson Securities, Sutro & Co., Crowell, Weedon & Co., RBC Dain Rauscher, Raymond James in Newport Beach, California from August 2007 until October 2011 and First Midwest Securities. He is currently registered with Madison Avenue Securities in San Diego, California, and has been since March 2015. He has three customer disputes against him, one of which is currently pending, alleging excessive trading, unauthorized trading, unsuitable trading, breach of fiduciary duty, failure to supervise, and misappropriation.