On December 31, 2020, FINRA announced today that it sanctioned Worden Capital Management LLC (WCM) more than $1.5 million, including approximately $1.2 million in restitution to customers whose accounts were excessively traded by the firm’s representatives, and a $350,000 fine for supervisory and other violations. As part of the settlement, WCM must also retain an independent consultant to conduct a comprehensive review of the relevant portions of the firm’s supervisory systems and procedures.
According to the Acceptance, Waiver and Consent accepted and signed by Worden Capital Management, “FINRA found that from January 2015 to October 2019, WCM and the firm’s owner and CEO, Jamie Worden, failed to establish and enforce a supervisory system reasonably designed to achieve compliance with FINRA’s rules relating to excessive trading. As a result, WCM’s registered representatives made unsuitable recommendations and excessively traded customers’ accounts, causing customers to incur more than $1.2 million in commissions. In one instance, a WCM customer whose account was traded for approximately one year had a cost-to-equity ratio (or breakeven point) of more than 100 percent and incurred realized losses of $118,490, inclusive of the $205,557 the customer paid in commissions. WCM did not take action to investigate or stop the trading in this customer’s account, and others like it, even though WCM received a monthly active account report that routinely flagged dozens of customer accounts indicative of excessive trading.”
In addition, “FINRA’s Department of Enforcement, said, “FINRA has an unwavering commitment to protect investors from excessive and unsuitable trading. 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.”
KlaymanToskes is a leading securities law firm dedicated to the protection of investor rights. Our Investment Litigation Blog entry is designed to alert investors of broker misconduct and the failure of brokerage firms to adequately supervise the handling of investor accounts. The purpose of this Blog Post is to investigate whether recommended investment strategies made by Worden Capital Management brokerage firms were suitable given the excessive level of transactions and commission costs charged to clients. For investors with investment losses that exceed $250,000 from accounts at full-service brokerage firms, and have information relating to the manner in which the firm handled their accounts are encouraged to contact Lawrence L. Klayman, Esq., at (561) 542-5131, and download our Special Investor Report.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation, on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm represents high net-worth, ultra-high-net-worth, and institutional investors, such as non-profit organizations, unions, public and multi-employer pension funds. KlaymanToskes has office locations in California, Florida, New York and Puerto Rico.