Worden Capital Management LLC (CRD# 148366), a FINRA-registered brokerage firm, was sanctioned $1.5 million by FINRA to settle findings that the firm churned (excessively traded) customer accounts. The sanction includes a $350,000 fine and $1.2 million in restitution.
According to a FINRA (the Financial Industry Regulatory Authority) letter of Acceptance, Waiver, and Consent (AWC), between FINRA and respondents Worden Capital Management (Worden) and principal Jamie Worden (Worden):
“From January 2015 to October 2019, WCM and Worden failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with FINRA’s suitability rule as it pertains to excessive trading. As a result, WCM registered representatives made unsuitable recommendations and excessively traded customer accounts, causing customers to incur more than $1.2 million in commissions.”
The AWC states that the above is a violation of FINRA Rules 3110 and 2010. It also says that in 2017, Worden Capital Management “interfered with customer requests to transfer accounts from WCM to another member firm in connection with the change in employment of 13 registered representatives in violation of FINRA Rules 2140 and 2010.”
FINRA also found that from January 2016 to December 2020, “WCM failed to timely file 59 amendments to the Uniform Applications for Securities Industry Registration or Transfer (Form U4s) and Uniform Termination Notice for Securities Industry Registration (Form U5s) for 13 of its registered persons to disclose the filing or resolution of customer arbitrations.” Because of this, Worden Capital Management failed to establish and maintain a supervisory system “reasonably designed to achieve compliance”.
Worden Capital Management The Subject of Multiple Stockbroker Arbitration Claims
With headquarters in Garden City, New Jersey, Worden Capital Management has been a FINRA member since 2009, and has 49 registered representatives working in six branch locations, mostly in the New York area.
Silver Law Group has investigated commissions and fees charged by Worden Capital Management LLC and COR Clearing. The investigation revealed that some investors were charged an additional fixed commission and other charges on trades made through COR Clearing.
Fees charged by a broker are required to be fair and reasonable, but what exactly is fair is not necessarily clearly defined. Fees can reduce your return on investments and even small fees can have a material impact over time.
Worden Capital Management Accused Of Churning
Before this settlement with FINRA, Worden Capital Management registered representatives had been subject of disputes alleging churning, which is when a broker buys and sells to generate commissions for themselves, as well as and unsuitable trade recommendations. Churning is a violation of FINRA rules and a common cause of action in arbitration claims.
In 2018 and 2021 WCM broker was subject of customer excessive trading/churning. In 2020, Weisberg consented to sanctions and entry of findings that he “engaged in excessive and unsuitable trading in the account of an elderly customer”. FINRA suspended him from acting as a broker and sanctioned him $75,638 in disgorgement and $7,500 fine.
Brokers have an obligation to have a reasonable basis to recommend transactions in their customer’s account. For a churning arbitration claim to be successful, it needs to be proven that the broker solicited the activity, and the activity was excessive for the customer’s risk tolerance. Ratios such as the turnover ratio and cost equity ratio may be used to determine if the activity was excessive.
Recover Investment Losses With Silver Law Group
If you suffered financial losses with Worden Capital Management, you may have a claim to recover your investment losses through FINRA arbitration. Silver Law Group has significant experience recovering losses on behalf of investors from broker-dealers including Worden Capital Management.
Silver Law Group is a nationally-recognized securities and investment fraud law firm with offices in New York and Florida. The firm has successfully recovered multi-million dollar awards for its clients through arbitration and the courts. Contact Scott L. Silver to discuss your legal matter toll-free (800) 975-4345 or by e-mail at firstname.lastname@example.org.