FINRA Alleges Joseph C. Farah Churned Customer’s Account
According to the Financial Industry Regulatory Authority, on January 17, 2018, Joseph C. Farah (CRD#: 2978633, Irvine, CA) submitted an Offer of Settlement consenting to FINRA’s findings and is permanently barred from working in the securities industry.
In May 2017, Farah was named a respondent in a FINRA complaint alleging that he willfully violated FINRA rules by churning a customer’s account.
The complaint alleges that Farah, with scienter, engaged in a manipulative, deceptive and fraudulent scheme. Farah purportedly acted with intent to defraud or, at the very least, with reckless disregard of the customer’s interests. Farah allegedly knew that the customer had a limited income and net worth, no investment experience, was supporting her children, and unable to tolerate any significant loss.
But Farah, nonetheless, purportedly day-traded her account with the entire attendant risks and costs. Farah also reportedly did this without discussing any of the transactions with the customer.
Moreover, FINRA alleges that Farah concealed what he was doing by failing to disclose that he was associated with a broker-dealer on the trading authorization agreements of an executing member firm, and by allegedly lying on his member firm’s annual compliance questionnaires.
The complaint also alleges that Farah engaged in excessive and unsuitable trading in the customer’s account while controlling the customer’s account. FINRA alleges that Farah’s trading in the customer’s account with the executing firm created risks that were incompatible with her investment needs and welfare.
FINRA also states that the trading was, as evidenced by the number of trades, the extraordinary turnover rate, and the cost-to-equity ratio, excessive and inconsistent with the customer’s investment objective and financial situation.
According to his FINRA BrokerReport, Joseph C. Farah was registered with Gold Coast Securities in Irvine, CA from September 2002 through September 2015 when he was discharged.
For FINRA’s full findings see FINRA case # 2014041432401.
Recovery from Churning
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.
Churning may result in significant losses and exposes the client to unnecessary tax liabilities. Often churning occurs when a broker has discretionary authority (either actual or implied) of a client’s account, meaning they do not need the clients consent to trade on their behalf.
When this happens, a FINRA arbitration claim against the financial advisor or the financial advisor’s employer is often the best way to recover the damages incurred as a result of the broker’s excessive trading.
Churning claims can be complex and sometimes difficult to prove. Brokerage firm almost always hire experience securities defense firms to defend them in these claims.
If you believe that you are the victim of churning by Joseph C. Farah, it is recommended that you consult with an experienced securities attorney. For a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors throughout the country in FINRA arbitration claims against their brokerage firm.