Daniel Gordon Maughan submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he allegedly churned, excessively traded and made unsuitable recommendations in a customer’s account in violation of Section 10(b) of the exchange Act of 1934, Rule 10b-5, and FINRA Rules 2020 and 2010.
From May 18, 2010 until August 17, 2017, Daniel Maughan was registered with Financial West as a General Securities Representative. According to FINRA, Mr. Maughan exercised de facto control over a customer’s trust account, executing approximately 1,648 trades, totaling $70 million. FINRA stated that Daniel Maughan’s churning and excessive trading generated commissions of $841,000 while causing the account to incur losses of $812,000. FINRA’s findings also stated the trading was inconsistent with the customer’s objectives and financial needs, and Mr. Maughan did not have a reasonable basis to believe the transactions were suitable. In addition, FINRA stated that by churning and seeking to maximize his own financial benefit Daniel Maughan acted either with intent to defraud the account or with reckless disregard for the customer’s interests. Daniel Maughan has been barred from association with any FINRA member in all capacities.
Section 10(b) of the Exchange Act prohibits the use of “any manipulative or deceptive device or contrivance” in connection with the purchase or sale of a security. Exchange Act Rule 10b-5 further prohibits: (a) employing “any device, scheme, or artifice to defraud,” (b) making “any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made . . . not misleading,” and (c) engaging “in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.” FINRA Rule 2020 is similar to Rule 10b-5 and provides that a member may not “effect any transaction in, or induce the purchase or sale of, any security by any manipulative, deceptive or other fraudulent device or contrivance.” FINRA Rule 2010 requires an associated person to “observe high standards of commercial honor and just and equitable principles of trade.”
Without admitting or denying FINRA’s findings, Daniel Maughan consented to the sanctions and has been barred from association from any FINRA member in all capacities.
Stockbrokers have been known to engage in many practices that may violate 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 supervisory system. The implementation of these industry rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker-dealers and/or their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the broker’s misconduct. Therefore, investors who have suffered losses stemming from churning/ excessive trading, unsuitable recommendations and/or other misconduct by their broker can file claims to recover damages against broker-dealers, like Financial West, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Financial West account due to churning/excessive trading and/or unsuitable recommendations by your broker? Was Daniel G. Maughan your stockbroker? 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 Financial West stockbrokers who may have engaged in broker misconduct 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 40 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 firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.