FINRA Accuses William Athas, Former Worden Capital and K.C. Ward Financial Broker, of Excessive Trading in Customer Accounts

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Updated on: January 20, 2022

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.

What is Excessive Trading?

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.

William Athas Excessive Trading Allegations

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.

Athas Allegedly Recommended Short-Term Trading on Margin

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:

  • Failed to perform reasonable diligence to understand the cumulative costs of his trading, including commissions, other trading costs, and margin interest;
  • Failed to perform reasonable diligence to understand the impact of these cumulative costs on the value of his customers’ accounts or the ability of his customers to earn a profit.
  • Failed to understand turnover rates and cost-to-equity ratios, and therefore failed to calculate and consider these metrics when recommending and executing a short-term, in-and-out trading strategy in his customers’ accounts.

Registration History of William Athas

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:

  • Worden Capital Management; Melville, Ny; 07/21/2016 – 08/25/2020
  • K.C. Ward Financial; Ronkonkoma, NY; 12/11/2014 – 08/02/2016
  • Securities America, Inc.; Port Jefferson, NY; 06/26/2014 – 12/18/2014
  • Dalton Strategic Investment Services Inc.; Port Jefferson, NY; 03/14/2013 – 07/01/2014
  • CBG Financial Group, Inc.; Melville, NY; 08/17/2011 – 03/14/2013
  • Aegis Capital Corp.; New York, NY; 08/04/2011 – 08/12/2011
  • Avalon Partners, Inc.; Holbrook, NY; 08/19/2010 – 08/03/2011
  • Liberty Partners Financial Services, LLC; Holbrook, NY; 08/14/2006 – 08/24/2010
  • J.W. Cole Financial, Inc.; Holbrook, NY; 06/16/2006 – 08/03/2006
  • J.P. Turner & Company, LLC. ; Holbrook, NY; 04/29/2004 – 06/21/2006
  • Emmett A. Larkin Company, Inc.; San Francisco, CA; 05/03/2002 – 04/28/2004
  • Seaboard Securities, Inc.; Florham Park, NJ; 01/27/1999 – 05/17/2002

Customer Disputes Against William Athas

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.

How to Protect Against Excessive Trading

FINRA suggests 3 steps to protect against excessive trading:

  1. Review Your Account Documents—Whether you are opening your account in person at your registered financial professional’s office or filling out your forms at home or online, take time to carefully review and verify the information before you sign—especially your risk tolerance and investment objectives.
  2. Check Your Trade Confirmations and Account Statements—Regularly review account statements and trade confirmations as they’re issued, including to take note of:
    • Unauthorized Trading—Are you noticing unauthorized trades in your account or receive confirmation of a trade you never approved? To guard against unauthorized trading, take notes of trades you have approved at the time you communicate your approval to your broker.
    • High Volume or In-And-Out Trading—Is there a high volume of trading activity and repetitive transactions in securities that are inconsistent with your investment objectives? If you’re pursuing a conservative strategy, you would not expect to see a high volume of trading or as many trades in your account as a customer with a higher risk tolerance.
    • Excessive Fees or Commissions—If the total amount of fees or commissions you’re paying seems high, or if one segment of your portfolio is consistently generating higher fees than any other, there’s a chance you’re being saddled with commissions or other expenses as a result of excessive trading. 
  3. Ask Questions— If you have questions about your account, ask questions, including the rationale for trading activity, the basis for commissions and fees, and amount of return on your investment.

What Happens in a FINRA Arbitration in an Excessive Trading Case?

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:

  • Client Level of Sophistication;
  • Unsuitable Investment Strategy Based on Objectives;
  • Prior Transactions of a Similar Nature and Frequency;
  • Client Trust and Reliance Upon a Financial Advisor;
  • Time Client Devotes to Independent Research;
  • Number of Transactions Solicited vs. Unsolicited;
  • Similar Positions with Different Brokerage Firms; and
  • Client Understanding of Investment Strategy.

Recover William Athas Excessive Trading Losses

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.

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