On Sep. 17, FINRA fined Vanderbilt $100k for undue churning.
- Vanderbilt Securities, and Barry Alan Champney fined $100k and 5k respectively.
Alleged Violations
- Procedures acknowledged regular trades in the same security may be unsuitable.
- But did not give guidance for detecting or preventing excess trading or churning.
- No systemic tracking of turnover rates and cost-to-equity ratios, in the accounts.
- Champney effected over 3,500 transactions in a 93-year-old customer’s account.
- Resulted in about $723k losses for client, but $735k in commissions for the firm.
- Firm noticed red flags of the misconduct and did not reasonably respond to them.
- Champney was aware of trading, losses and commissions in customer’s accounts.
- Observed that accounts appeared on firm’s activity report in 23 out of 30 months.
Sanctions
- As well as fines, settlement payment of $470k was made to customer's guardian.
- Champney suspended from association with FINRA members in principal capacity.
- After a three months suspension must requalify passing the requisite examination.
