FINRA Orders Broker and Madison Avenue Securities to pay Court costs and fees
According to the Financial Industry Regulatory Authority, an all-public FINRA arbitration panel has awarded a California investor the entire amount of her churning claim. The award is against broker David Lloyd Barber and his firm, Madison Avenue Securities. The total amount of compensatory and punitive damages is $1.67 million.
The FINRA panel found the defendants liable for churning, unauthorized trading, unsuitable trading, breach of fiduciary duty and failure to supervise.
The award notices states that Barber was ordered to pay Donna Gambee $1.2 million of the compensatory and punitive damages. Madison Avenue Securities was reportedly ordered to pay the remainder.
Gambee was also awarded attorneys’ fees of almost $868,000 and costs of more than $44,000. The fees will reportedly be paid jointly by Barber and his San Diego firm.
According to his FINRA BrokerCheck report, in 2013, Barber was suspended for four months and fined $25,000 for allegedly receiving five loans totaling $867,000 from several of his clients when he was affiliated with Raymond James. He purportedly concealed the loans from Raymond James by routing them through an outside business he owned. Barber was registered with Raymond James from August 2007 until he was terminated in 2011.
Barber was affiliated with First Midwest Securities in Newport Beach, CA from September 2011 until March 2015, prior to making the move to Madison Avenue Securities.
What is Churning fraud?
Churning is an illegal and unethical practice that takes place when a broker or financial advisor excessively buys and sells a client’s securities to increase their own commissions. The more a broker trades the more they get paid. In many cases this is enough incentive for unscrupulous brokers to over-trade in a client’s account.
Essentially, churning fraud is any type of trading strategy that could not possibly benefit the client and is clearly implemented by the broker to maximize commissions. If churning is proven, a broker or brokerage firm can be liable for damages a client incurs and potentially also face disciplinary action.
In 2016, over 3,681 arbitration cases were filed with FINRA. Of these cases filed, 254 cases involved churning. Excessive trading or churning claims often increase when the market is flat or moving up (since clients are more willing to allow their advisor to trade in these types of markets).
Free Consultation
If you believe that you have been the victim of churning or excessive trading, please call the securities attorneys of The White Law Group 888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.