FINRA’s Department of Enforcement investigated Adams alleged misconduct and determined he engaged unsuitable excessive trading and churning in two of his customers’ accounts. According to FINRA, Adams’ unsuitable trading activity resulted in a turnover rate in one of the customer’s account of 16.14, and a cost-to-equity ratio of 70.99%. With respect to the other customer, improper trading activity resulted in a turnover rate in the customer’s account of 19.16, and a cost-to-equity ratio of 91.96%. Adams received approximately $57,000 in commissions from these illicit activities.
FINRA initiated an investigation into Adams’ aforementioned alleged misconduct. In connection with this investigation, FINRA sent Adams a request to produce documents and information. According to FINRA, Adams acknowledged receipt of FINRA’s Rule 8210 requests; yet he failed to cooperate with FINRA’s investigation.
Based upon the foregoing alleged misconduct, FINRA contends Adams violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and also violated FINRA Rules 2020, 2111, 2010 and 8210. For example, Section 10b-5, provides that in connection with the purchase or sale of any security, “[i]t shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange … to employ any device, scheme or artifice to defraud…” Here, Adams’ unsuitable excessive trading and churning in two of his customers’ accounts constitutes fraud.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment losses and damages investing with Adams through Caldwell, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please complete the contact form or contact one of our attorneys at (800) 627-2179 to schedule a free consultation.