Triggered by customers’ complaints, the Financial Industry Regulatory Authority (FINRA) has initiated an investigation into broker Ahmad “Kevin” Wares’ alleged violations of securities law. Wares has already been subject to a judgment, multiple customers complaints and has a history of employment with troubled financial firms which have been expelled from FINRA.
Investors, who have suffered losses as a result of Wares’ fraudulent conduct, may be able to recover same through securities arbitration. This is accurate even when an investor did not end up opening an account with Wares’ firm. Any brokerage agreement has an Arbitration Clause present as a means for dispute resolution, which allows defrauded investors to seek restitution of losses and compensation. FINRA Arbitration can take as little as nine months and the rules of discovery and evidence are more relaxed than in a civil litigation.
FINRA’s investigation of Wares is based on allegations of unauthorized trades and churning by Wares. Under FINRA Rule 2510(b), brokers are not allowed to engage in unauthorized trading – buying, exchanging or selling securities without the prior consent or authority from the investor – a broker must discuss all trades with the investor prior to executing them.
“Churning” means excessive trading, which is not economically advantageous to the investor but is conducted solely to generate a commission for the broker. All that is needed to establish a churning claim is (1) excessive purchases and sales of securities, which generate broker commissions; and (2) broker control over the transactions in the account and discretion over account activity.
Article Type: InvestigationTopic: Investments
