National investment fraud lawyers KlaymanToskes is investigating (“William Athas Excessive Trading Investigation”) on behalf of former customers of ex-Worden Capital Management, LLC and K.C. Ward Financial broker William Nicholas Athas (“Athas”) in light of the Financial Industry Regulatory Authority’s (“FINRA”) complaint filed against him in January 2022. According to FINRA, from December 2014 through April 2020, Athas churned and excessively traded nine accounts of seven different customers while he was associated with K.C. Ward Financial and Worden Capital.
Excessive trading occurs when a broker recommends a high number of trades that, in the aggregate, do not align with the customer’s investment goals and financial circumstances. Where it involves the intent to defraud the customer or was carried out with reckless disregard for a customer’s interests, it is considered “churning”—a form of securities fraud.
According to FINRA, Athas allegedly opened customer accounts though cold calling, in which he touted his sophistication and knowledge of financial markets and promised significant returns. Athas then allegedly churned and excessively traded in the accounts, causing customers to pay approximately $1.6 million in commissions and other trading costs, and to suffer approximately $1.1 million in losses.
FINRA’s Complaint also alleges that Athas recommended that the customers engage in short-term, in-and-out trading, often on margin, without having a reasonable basis to recommend that trading strategy to his customers. Athas’ recommended strategy therefore was not suitable.
Further, FINRA alleges that the former Worden Capital and K.C. Ward Financial broker of the following:
William Athas was most recently registered with SW Financial (Melville, NY). He was registered with the firm from August 2020 to December 2021. His other previous registrations include:
According to FINRA BrokerCheck, William Athas has 9 customer disputes on his record. The most recent customer dispute, which as of time of writing is a May 2020 customer dispute, is currently pending. The dispute alleges Athas conducted unsuitable trading, and alleged common law fraud; churning; breach of contract; negligent supervision; breach of fiduciary duty.
FINRA suggests 3 steps to protect against excessive trading:
In a FINRA arbitration claim of excessive trading or “churning” in a brokerage account, Claimants may allege a breach of fiduciary duty and conflict of interest for recommended investment strategies whose sole purpose is to enrich the brokerage firm and/or its financial advisor through excessive commissions, fees or costs.
FINRA arbitrations will generally be successful in an excessive trading or “churning” claim if a customer can prove two case facts. First, the panel must conclude the financial advisor controlled or solicited the activity in the account and second, the activity in the account was excessive based on the Claimant’s risk tolerance and investment objectives.
There are many factors an arbitration panel will consider to determine whether a financial advisor had control over the activity in a financial brokerage account. Several factors that may be considered include:
Former customers of William Athas with losses in excess of $250,000, and those who have information relating to the manner in which he handled customer 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 on behalf of retail and institutional investors throughout the world in large and complex securities matters. KlaymanToskes has recovered more than $225 million for investors in FINRA arbitrations. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.