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Articles Posted in Churning

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San Diego, CA-based Independent Financial Group, LLC has been fined and censured by the SEC after the firm failed to establish and follow a supervisory system for supervising the firm's brokers when handling customer accounts. This failure occurred between July 2020 and December 2022 and included noncompliance with Registration Best Interest and other requirements. During the same time frame, IFG failed to supervise one broker that churned, or excessively traded, five customer accounts and violated FINRA Rules 3110 and 2010. From September 2022 through April 2024, IFG also made “late and incomplete responses” to a FINRA Rule 8210 request violating FINRA Rules 8210 and 2010.San Diego, CA-based Independent Financial Group, LLC has been fined and censured by the SEC after the firm failed to establish and follow a supervisory system for supervising the firm’s brokers when handling customer accounts. This failure occurred between July 2020 and December 2022 and included noncompliance with Registration Best Interest and other requirements. Continue reading ›

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Minnesota-based broker-dealer Principal Securities has been sued by a local nonprofit over allegations of churning in variable annuities by one of its former registered representatives. The company disclosed this information in its recently filed annual focus report with the SEC. Principal Securities is also the subject of a separate FINRA arbitration claim based on the actions of the same representative. The plaintiff in this case is the Legacy of Angels Foundation, a 501 (c)(3) nonprofit and private family foundation with the mission, “To improve the lives of children by working to promote the expansion of newborn screening, and to further education, awareness, and research for Krabbe disease and Cystic Fibrosis to provide a better treatment and a cure.”  In June 2023, the nonprofit became known as the Rosenau Family Research Foundation.   In the lawsuit, the plaintiff alleges that Principal Securities made unsuitable recommendations, failed to supervise, and forfeiture of fees and commissions collected by the representative. The representative was not named in the report. The company expects losses in this case to be between $3 million and $5 million. The report was filed with the SEC on February 28, 2024.Minnesota-based broker-dealer Principal Securities has been sued by a local nonprofit over allegations of churning in variable annuities by one of its former registered representatives. The company disclosed this information in its recently filed annual focus report with the SEC. Principal Securities is also the subject of a separate FINRA arbitration claim based on the actions of the same representative. Continue reading ›

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Stewart Ginn (CRD# 4503197, aka “Stewart Taylor,” “Paxton Ginn Jr”) is a registered broker currently employed with Independent Financial Group, LLC (CRD# 7717) of Santa Maria, CA. His previous employers include Navian Capital Securities LLC (CRD#:145037) of Cincinnati, OH, Newbridge Securities Corporation (CRD# 104065) of New York, NY, and Chicago Investment Group, LLC (CRD# 11853, expelled by FINRA on 09/14/2010) of Chicago, IL. He has been in the industry since 2002. During his employment and registration with Independent Financial Group (IFG), FINRA alleges that Ginn churned and over-traded five accounts he acquired in 2019 following the sudden death of a fellow IFG broker. After buying the broker’s book of business, he became the registered representative of record for those customers, including the five involved in the disciplinary action.Stewart Ginn (CRD# 4503197, aka “Stewart Taylor,” “Paxton Ginn Jr”) is a registered broker currently employed with Independent Financial Group, LLC (CRD# 7717) of Santa Maria, CA. His previous employers include Navian Capital Securities LLC (CRD#:145037) of Cincinnati, OH, Newbridge Securities Corporation (CRD# 104065) of New York, NY, and Chicago Investment Group, LLC (CRD# 11853, expelled by FINRA on 09/14/2010) of Chicago, IL. He has been in the industry since 2002. Continue reading ›

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Most investors believe that their brokers will trade on their behalf with their best interests in mind. In fact, they’re required to in accordance with Regulation Best Interest, or Reg BI. In a nutshell, brokers must always use the investor’s best interest as their benchmark before making any recommendation. This includes vetting an investment and completing due diligence following their broker-dealer’s recommendations. Unfortunately, not every broker follows that rule, nor any other rule, resulting in losses for the investor. One method is when a broker continually trades in an investor’s account, but the investor sees no reasonable gains. Sometimes, the excess trading is done on margin, leading to additional charges and risks. The investor loses money and pays increasing amounts of commissions, fees, and other expenses. This process is known as churning. Churning DefinitionMost investors believe that their brokers will trade on their behalf with their best interests in mind. In fact, they’re required to in accordance with Regulation Best Interest, or Reg BI. In a nutshell, brokers must always use the investor’s best interest as their benchmark before making any recommendation. This includes vetting an investment and completing due diligence following their broker-dealer’s recommendations. Continue reading ›

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Christopher Polinaire (Christopher Edward Polinaire CRD# 4330879) is a previously-registered broker whose last employer was Network 1 Financial Securities Inc. (CRD#:13577) of Hauppage, NY. His prior employers include Arive Capital Markets (CRD#:8060) of Ronkonkoma, NY, First Standard Financial Company, LLC (CRD#:168340) of Garden City, NY, and Rockwell Global Capital LLC (CRD#:142485) of Melville, NY. He has been in the industry since 2004. Following a 2020 cause exam by FINRA of Arive Capital Markets, it was found that Polinaire “excessively and unsuitably” traded in three customer accounts. These customers were senior investors, all over the age of 65.Christopher Polinaire (Christopher Edward Polinaire CRD# 4330879) is a previously-registered broker whose last employer was Network 1 Financial Securities Inc. (CRD#:13577) of Hauppage, NY. His prior employers include Arive Capital Markets (CRD#:8060) of Ronkonkoma, NY, First Standard Financial Company, LLC (CRD#:168340) of Garden City, NY, and Rockwell Global Capital LLC (CRD#:142485) of Melville, NY. He has been in the industry since 2004. Continue reading ›

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Efthimios George Petrou (CRD# 2672840) is a registered broker last employed with Arive Capital Markets (CRD#:8060) of Ronkonkoma, NY. He was also employed by J.P. Turner & Company, L.L.C. (CRD#:43177) of Middle Island, NY, Investec Ernst & Company (CRD#:266) of New York, NY, and Royce Investment Group, Inc. (CRD#:10494) of Woodbury, NY. He has been in the industry since 1995. Following FINRA’s 2019 cycle exam of Arive Capital Markets, it was discovered that Petrou had engaged in excessive trading for a retired client. He was a 67 year old pharmacist who had a limited understanding of the stock market. From January 2017 through October 2018, while employed with Arive, Petrou engaged in excessive trading which included the use of margins. Petrou recommended to his customer a total of 73 trades, all placed on margin. The total of all the trades meant that this customer paid $88,348.13 for commission and trade costs $7,958.52 for margin interest, totaling $96,306.65. This cost-to-ratio was 86%, indicating that the customer’s account would have to increase by 86% to break even. Petrou’s unsuitable recommendations led to the customer losing approximately $17,000 by following his advice.Efthimios George Petrou (CRD# 2672840) is a registered broker last employed with Arive Capital Markets (CRD#:8060) of Ronkonkoma, NY. He was also employed by J.P. Turner & Company, L.L.C. (CRD#:43177) of Middle Island, NY, Investec Ernst & Company (CRD#:266) of New York, NY, and Royce Investment Group, Inc. (CRD#:10494) of Woodbury, NY. He has been in the industry since 1995. Continue reading ›

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Back in 2019, we blogged about broker Michael Venturino (CRD #5872439), the subject of multiple customer disputes totaling $1.6 million. Since then, he has additional disclosures, including two judgements, a bankruptcy discharge, and of course, more customer disputes. At this writing, Venturino is still registered and employed with Spartan Capital Securities, LLC (CRD#: 146251) of Garden City, NY. He began his broker career in 2010. In the disciplinary action, FINRA’s investigation found that Venturino exercised de facto control over the accounts of eleven clients while at Aegis and made unauthorized trades in a total of twelve accounts. He made recommendations to the clients of what they should buy and sell as well as unauthorized trading.Back in 2019, we blogged about broker Michael Venturino (CRD #5872439), the subject of multiple customer disputes totaling $1.6 million. Since then, he has additional disclosures, including two judgements, a bankruptcy discharge, and of course, more customer disputes. Continue reading ›

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Broker-dealer Joseph Stone Capital (CRD# 159744/SEC# 8-69014), based in Mineola, NY, has recently been fined by FINRA for allowing eight of its brokers to engage in excessive trading in their customers’ accounts. This practice is known as “churning,” and it always costs a customer money. From January 2015 to June 2020, Joseph Stone Capital and eight of its brokers engaged in excessive trading in several customer accounts and made considerable commissions for themselves and the firm. This caused the customers to over-pay and never see a return on their investments. FINRA made the announcement on September 8, 2022, and levied a fine of $1.04 million against the firm. The firm also failed to create adequate Written Supervisory Procedures (WSPS) that complied with FINRA Rule 2111.Broker-dealer Joseph Stone Capital (CRD# 159744/SEC# 8-69014), based in Mineola, NY, has recently been fined by FINRA for allowing eight of its brokers to engage in excessive trading in their customers’ accounts. This practice is known as “churning,” and it always costs a customer money. Continue reading ›

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Arkady Ginsburg (CRD:#5256747) is a registered broker who is currently employed with Aegis Capital Corp. (CRD#:15007) of New York, NY. He was previously employed with Rockwell Securities LLC (CRD#:142483) of New York, NY, and S.W. Bach & Company (CRD#:43522) of Port Washington, NY. He has been in the industry since 2006. Scott Hananel (CRD:#3080827) is a previously registered broker last employed with Aegis Capital Corp. (CRD#:15007) of Melville, NY,  Gunnallen Financial, Inc (CRD#:17609) of Farmingdale, NY, and Milestone Group Management LLC (CRD#:44486) of Lake Success, NY. He has been in the industry since 1998. Both brokers worked for Aegis and suspended by FINRA for similar allegations. Ginsburg has only one customer dispute, filed on 2/12/2018. The customer alleged “unauthorized trading and unsuitable investment recommendations.” The client requested damages of $32,398.00, and the firm settled the claim for $12,635.22.Arkady Ginsburg (CRD:#5256747) is a registered broker who is currently employed with Aegis Capital Corp. (CRD#:15007) of New York, NY. He was previously employed with Rockwell Securities LLC (CRD#:142483) of New York, NY, and S.W. Bach & Company (CRD#:43522) of Port Washington, NY. He has been in the industry since 2006. Continue reading ›

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