A Garden City, N.Y., broker-dealer has agreed to pay clients more than $1 million in restitution plus a fine for excessively trading on their accounts, the Financial Industry Regulatory Authority announced Thursday.
Worden Capital Management and its owner and CEO, Jamie Worden, agreed to pay a total of more than $1.5 million for earning commissions on excessive trades, Finra said. In agreeing to the settlement, neither the firm nor Worden admitted or denied guilt. Worden Capital Management is a broker-dealer that generates most of its revenues from commissions charged in connection with buying and selling equities for its retail customers, the complaint said.
Between January 2015 and October 2019, the firm and its registered representatives made unsuitable recommendations and excessively traded on customers’ accounts, causing the customers to pay more than $1.2 million in commissions, the complaint said. The firm and Jamie Worden failed to investigate or stop the trading in the accounts, “even though WCM received a monthly active account report that routinely flagged dozens of customer accounts indicative of excessive trading,” Finra said.
“Firms must ensure they establish systems and procedures reasonably designed to supervise representatives’ recommendations to their customers, and firms’ supervisory personnel must have in place the necessary tools and training to address red flags,” said Jessica Hopper, executive vice president and head of Finra’s Department of Enforcement, in a statement.
The regulator also found that Jamie Worden and the firm interfered with customers’ requests to transfer their accounts to another firm in the network to which Worden Capital belonged, the complaint said. As a result of supervisory failures, the firm failed to file reports about the resolution of customer arbitrations in a timely manner, Finra said.
Worden Capital was ordered to pay $1.2 million in restitution and a fine of $350,000 and to retain an independent consultant to conduct a comprehensive review of the relevant portions of the firm’s supervisory systems and procedures. Jamie Worden was fined $15,000.