Worden Capital Management’s Settlement Includes $1.2M in Customer Restitution
In December 2020, Worden Capital Management, a New York-based broker-dealer, arrived at an over $1.5M settlement with the Financial Industry Regulatory Authority (FINRA) over excessive trades made by the firm’s registered representatives.
The self-regulatory organization (SRO) contends that from January 2015 to October 2019, the New York brokerage firm did not have the kind of supervisory system in place that would have allowed it to “achieve compliance” with rules having to do with churning and excessive trading.
Churning is typically the name used to describe when a broker trades too much in a customer’s account for the purposes of earning commissions.
FINRA contends that Worden Capital’s failure to supervise its registered representatives enabled some of them to make unsuitable investment recommendations and excessively trade in customers’ accounts. These trades caused customers to pay over $1.2M in commissions.
Worden Capital Management has six branches that are primarily in New York. According to FINRA’s Letter of Acceptance, Waiver and Consent, the broker-dealer makes most of its revenue from commissions related to the selling and buying of equities for retail customers. Retail customers are typically inexperienced investors who cannot take on too much risk when investing.
Our New York broker fraud attorneys at Shepherd Smith Edward and Kantas (SSEK Law Firm at investorlawyers.com) are speaking to investors who may have suffered losses due to churning, unsuitable recommendations, or other actions by Worden Capital Management brokers. Contact us at (716) 261-3529 to explore your legal options.
Broker-Dealer Accused of Failing to Supervise Brokers’ Excessive Trading
In the Letter, FINRA provides a number of examples of excessive trading by Worden Capital Management brokers:
- For example, one customer lost over $1M, inclusive of more than $285K in commissions. 635 trades took place in this person’s account between 5/2015 and 9/2017.
- Another Worden Capital Management customer lost nearly $37K, inclusive of $45K in commissions. There were 83 trades in their account between December 2016 and October 2018.
- A different customer, who had 313 trades in their account between November 2016 and September 2017, lost over $118K inclusive of more than $205K in commissions.
- Between June 2016 and March 2017, 65 trades were made in a fourth customer’s account. Losses were $118,136 inclusive of more than $35K in commissions.
The SRO contends that even when there were red flags indicating churning, Worden Capital Management did not investigate or stop excessive trading from continuing. In addition to the $1.2M in restitution, Worden Capital Management will pay a $350K fine for the supervisory violations. The broker-dealer settled but without denying or admitting to the charges.
Ex-Worden Capital Management Brokers Disciplined For Churning
In 2019, Worden Capital Management fired broker Gregory Thomas Dean, who has since been barred by FINRA. Dean, who was with the broker-dealer for five years, has been the subject of over a dozen customer disputes. A number of these claims allege churning.
Another ex-Worden Capital Management stockbroker, Donald Joseph Fowler, continues to face pending customer complaints. Fowler also was with Worden for five years. Last year, he was the subject of investigations by both FINRA and the Securities and Exchange Commission (SEC) for alleged churning, unauthorized trading, and making unsuitable recommendations to customers.
Experienced New York Broker Fraud Law Firm
Our experienced investment fraud lawyers have successfully helped investors in the New York state region and across the United States to recoup financial losses incurred by broker fraud and negligence. Contact SSEK Law Firm at (716) 261-3529 to request your free, no-obligation case consultation.