Shepherd Smith Edwards and Kantas Securities Attorneys

Shepherd Smith Edwards and Kantas Securities Attorneys are Investigating

If you are a Sutter Securities Inc. customer and you suspect your portfolio losses may have been caused by excessive trading by your financial advisor, contact Shepherd Smith Edwards and Kantas (investorlawyers.com) today. The brokerage firm is currently the subject of a complaint by the Financial Industry Regulatory Authority’s (FINRA) enforcement department, accusing the firm of alleged excessive trading in an elderly retiree’s accounts. This purportedly led to the customer, someone with a moderate risk tolerance level and the objective of long-term growth, to pay more than $2.9M in trading costs and sustain at least $1.2M in realized losses

The FINRA complaint accuses Sutter Securities of unsuitably recommending and making 2,217 trades in two of this investor’s trust accounts between March 2020 and July 2021. The enforcement division also alleges that :

The trading strategy was unsuitable given the client’s investment profile. This included turnover rates as high as 16, a 17.3-day holding period average, and in-and-out trading.
Margin trading appears to have often been involved. By the end of November 2020, contends the FINRA complaint, this elderly retiree’s margin debt balance was around $7.66M.
There were at least several round-trip trades in which the Sutter Securities broker allegedly flipped large positions fast, even when price changes were small. This purportedly locked in losses for the customer even as the broker earned significant commissions—including at least one transaction involving commodity trades that cost the retiree more than $28K in commissions, even as he lost $44K.

FINRA’s enforcement department is not only alleging excessive trading but also quantitative unsuitability, Regulation Best Interest violations, and supervisory failures by Sutter Securities.

The enforcement division is asking that there be a FINRA hearing panel. It is seeking restitution or disgorgement plus interest.

What Should You Do If You Suspect Excessive Trading Led To Your Investor Losses?

Excessive trading is what happens when there is too much buying and trading of securities in a customer’s account to the degree that it ignores the parameters of their investment profile, as well as their best interests and financial goals. While some sophisticated investors may deliberately opt to take part in high-frequency trading, this is generally an unsuitable approach for most retail investors, including older retirees. Financial advisors know this.

Also known as churning, excessive trading may not only lead to serious losses for an investor, but it can also increase the costs they end up paying, perhaps even generating tax liability. In the meantime, the financial advisor and their firm often end up making higher commissions and fees.

Excessive trading is considered broker misconduct, especially when customer losses that could have been avoided occur. Our trusted churning attorneys can help you explore your legal options and determine whether you have grounds for an investment loss recovery claim against your financial advisor. We have helped our clients to collectively recoup many millions of dollars in awards and settlements.