According to the Financial Institutions Regulatory Authority, a complaint was filed in 2016 against broker Hank Mark Werner of Northport, New York, charging him with securities fraud for churning the account of his customer, a 77-year old blind widow. The FINRA complaint alleged that Werner churned the widow’s accounts over a three-year period. $243,000 in commissions were charged with $184,000 in losses.
Werner had been the elderly widow’s broker and that of her deceased blind husband for 21 years. After the customer’s husband passed away, Werner aggressively traded traded the widow’s account to generate excessive commissions for himself. Werner exercised control over each account and recommended every trade. The widow customer followed Werner’s recommendations. Because she was blind and severely debilitated, requiring in-home care, the customer relied completely on Werner to accurately report account activity and performance.
Churning involves unauthorized trading of any account for the purpose of generating commissions for the broker’s benefit. Many other factors are considered. Expert witnesses many times are called at hearing. Some if the components are control of the account by the broker, annual turnover and the commission to equity ratio. The Law offices of Anthony M. Abraham, Esq., PC has pressed many claims of this nature. http://www.BrokerFraud.Net. Here is a snapshot of interesting aspects of this case:
Werner placed over 700 trades in more than 200 different securities. The widow was charged, either a markup or commission on every purchase and sale, and initially charged a markup or commission between 2.50 percent and 3.00 percent. Later, the broker increased his markups and commissions to 3.75 to 4.25 percent.
FINRA noted that there was little to no chance that the customer would profit from such trading. It also notes the trading in the accounts was excessive, as evidenced by the high turnover rates and cost-to-equity ratios ranging from 64.40 percent to 97.73 percent.
Werner also recommended an unsuitable variable annuity exchange, and earned a commission of more than $10,000 on the transaction.
Anthony M. Abraham, Esq., PC is experienced in churning and unauthorized trading claims. If you suspect that your account has been churned, please call us Toll Free at 1-877-430-4877 for a Free Consultation or email us at Anthony@Abrahamattorneys.com.http://www.BrokerFraud.Net