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FINRA Bars Vanderbilt Securities Broker for Excessive Trading

Mark Kaplan, a former registered representative with Vanderbilt Securities, submitted a Letter of Acceptance, Waiver, and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was permanently barred from association with any FINRA member firm in all capacities.  Mark Kaplan, of Merrick, New York, was found by FINRA to have engaged in excessive trading in his customer’s accounts. His customer, a 93-year-old man with dementia, allegedly suffered trading losses of approximately $723,000.

According to FINRA, Mr. Kaplan used his de facto control over his customer’s accounts to excessively trade in a manner that was inconsistent with his customer’s objectives, financial goals, and risk tolerances.  FINRA found that Mr. Kaplan effected more than 3,500 transactions is his customer’s accounts.  This excessive and unsuitable trading resulted in nearly $723,000 in trading losses for his customer, and generated approximately $735,000 in commissions and markups for Mr. Kaplan and Morgan Stanley.  Without admitting or denying FINRA’s findings, Mark Kaplan consented to the sanctions.

Excessive trading or “churning” involves excessive trading by a broker in a client’s account mainly to generate commissions.  Churning is a violation of Federal and state securities statutes, industry rules and regulations and a breach of fiduciary duty to investors.  Churning can occur if a stockbroker exercises control over the investment decisions in your account and purchases stocks or recommends that you purchase and sell stocks for his/her benefit, i.e., commissions, not yours!  These trades rarely, if ever, make the investor any money.  In fact, the additional commissions raise the break-even point for the investor to the level where the stock must perform at an extremely high level in order for the investor to make any money.  Although there is no quantitative measure for churning, frequent buying and selling of securities that does little to meet a client’s investment objectives may be construed as evidence of churning.  Churning may result in substantial losses in a client’s account, as the above-mentioned unsuitable excessive trading revealed.

Stockbrokers have been known to engage in many types of practices that may be in violation of industry and firm rules, practices, and procedures.  In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a reasonable supervisory system.  The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures.  If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the misconduct. Therefore, investors who have suffered losses stemming from excessive trading (churning), unsuitable recommendations and/or other stockbroker misconduct by their broker can file claims to recover damages against broker-dealers, like Vanderbilt Securities, which should consistently oversee its brokers’ activities in order to prevent the above-described prohibited conduct.

Have you suffered losses in your Vanderbilt Securities account due to your stockbroker’s excessive trading?  If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.  Mr. Pearce is accepting clients with valid claims against Vanderbilt Securities stockbrokers who may have engaged in excessive trading strategies and caused investors’ losses.

The most important of investors’ rights is the right to be informed!  This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida.  For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues.  The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally!  Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.