Articles Tagged with Excessive Trading

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from brokers who churn customer accounts. One of the most perennial abuses in the brokerage industry is when broker-adviser “churn” accounts to generate extra commissions or fees. When that happens, it’s difficult for clients to make money because their accounts are consumed by transaction fees.

Marc Augustus Reda, a registered representative for Spartan Capital Securities in New York City, was recently charged by FINRA, the securities industry regulator, with overcharging clients some $2 million. “From 2017 through 2019,” reports fa-mag.com, “Reda, among other things, recommended unsuitable investments to his clients and traded excessively in those accounts, the FINRA complaint said. His activities resulted in 66 clients paying a total of $952,764 in commissions and fees, while incurring total net losses of $934,482,” FINRA said.

Reda generated the excessive fees through an “active trading” strategy in which he made trades without his clients’ specific permission. FINRA noted that “Reda failed to consider that the substantial commissions and costs associated with his investment strategy made it unlikely his customers could make any profits.”

Did you lose money with Paul Lebel, a former broker with LPL Financial? If so, the attorneys at Stoltmann Law Offices may be able to help you bring legal recourse against LPL for failing to supervise him while he was registered there, causing investment losses. Firms such as LPL may be responsible for financial losses and we bring legal action against firms such as LPL in the Financial Industry Regulatory Authority (FINRA) arbitration process on a contingency fee basis. This means, we don’t make money unless you recover yours. The call to us is free with no obligation, so please call today. 312-332-4200. Our law offices are based in Chicago.

According to a recent InvestmentNews article, Paul Lebel was barred from the industry on Tuesday by the Securities and Exchange Commission (SEC) for churning and excessively trading mutual funds in customer accounts and generating excess fees. He was accused of defrauding four customers in several of their accounts, according to an SEC administrative proceeding against him. It stated: “In particular, Lebel exercised de facto control over these customers’ accounts and excessively traded mutual fund shares which carry large front-end load fees.” These mutual fund shares were A shares, which are typically meant to be long-term, buy-and-hold investments. Mr. Lebel allegedly made $50,000 in commissions from the sale of them. A broker such as Mr. Lebel must take into account a customer’s net worth, investment objectives, investment sophistication and age, among other factors before recommending an investment to them. If he does not, his firm may be responsible for investment losses. Churning, or excessive trading is an especially egregious securities law violation, as it typically generates large fees for the broker and causes the client to pay unnecessary and, sometimes, high fees.

According to his online FINRA BrokerCheck report, Lebel was registered with Montano Securities Corp, Gruntal & Co., AG Edwards & Sons, Oppenheimer & Co., LPL Financial in Cambridge, Massachusetts from August 2008 until November 2014 and Wood (Arthur W.) Company. He has eight judgment/liens against him. He is not licensed within the industry at this time.

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