Worden Capital Management, LLC (“WCM”) has been expelled from FINRA as of June 27th, 2022, however, what does that mean for its investors? National investment fraud lawyers KlaymanToskes stress that investors who experienced losses as a result of Worden’s recommendations may still have recovery options.
After a brokerage firm is expelled from FINRA, investors typically transfer their portfolios to new brokerage firms. At that point, it is the responsibility of the new brokerage firm and advisor to review the investor’s portfolio and make any necessary changes to ensure the portfolio is suitable for the customer. Failure to do so can result in further losses, and the new firm can be held responsible in a FINRA arbitration claim.
Investors are not the only ones to transfer their accounts to other brokerage firms once a firm is expelled. Brokers that committed the conduct resulting in the expulsion can transfer to new firms as well. Some brokers bring their clients with them and continue the misconduct at their new firms.
If you continue to experience investment losses after transferring your account from Worden Capital, you are encouraged to immediately contact investment loss lawyer Lawrence L. Klayman at (888) 997-9956 or lklayman@klaymantoskes.com for a free consultation.
Why Was Worden Capital Management Expelled?
FINRA’s Department of Enforcement Decision Report, reveals numerous violations of federal securities laws and FINRA rules by WCM, including:
Worden Capital’s Disciplinary History
According to Brokercheck, Worden Capital Management has also been subject to previous disciplinary history including 6 regulatory disclosures, 8 customer complaints, and a total of 40 disclosures against its owners and executive officers.
In December 2020, FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) with WCM and its majority owner and CEO Jamie John Worden. FINRA announced that it sanctioned WCM more than $1.5 Million, including $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. Worden (CRD# 4637404) has since been indefinitely barred and suspended from acting as a broker as of October 2021.
If you have suffered investment losses with Worden Capital Management LLC, and/or due to the mismanagement of your accounts by Jamie John Worden, contact attorney Lawrence L. Klayman at (888) 997-9956 or lklayman@klaymantoskes.com to discuss your recovery options.
Excessive Trading and Failure to Disclose Commissions
According to the AWC, Worden Capital’s unreasonable supervisory system allowed its representatives to make unsuitable recommendations and excessive trades in customer accounts, causing customers to incur more than $1.2 million in commissions.
In one example described by FINRA’s Department of Enforcement, there were 635 trades in a customer’s account from May 2015 to September 2017. The account had “an annualized cost-to-equity ratio of approximately 84% and an annualized turnover rate of more than 92, causing the customer to incur losses of over $1 Million, including $285,169 in commissions.” On the rare occasions when managers discovered problematic trading, only limited measures were taken in response, such as recommending that representatives reduce their future commissions.
Who is Jamie John Worden?
Jamie John Worden (CRD#4637404) was previously registered as a broker with Worden Capital Management from 2009 to 2021. Worden served as CEO and majority owner of WCM and was indefinitely barred in all capacities as of October 2021. According to his Brokercheck report, Worden is currently the subject of 24 disclosures, including 18 customer disputes with a total of nearly $10 million in alleged damages.
Customer disputes against Worden include allegations of failure to supervise and negligent supervision, excessive trading, and churning. “Excessive Trading” occurs when a registered financial professional recommends a high number of trades in a customer’s account, not to benefit the customer but instead to generate commissions for the broker. “Churning” is an illegal practice which may occur when a broker executes excessive trades in order to generate greater commissions.
In the previously mentioned AWC entered by and between FINRA and Worden, he consented to the findings that his firm allowed its representatives to make unsuitable recommendations and excessively trade customer accounts. He also consented to FINRA’s findings that as owner and CEO of WCM, he failed to act on numerous red flags indicative of potentially unsuitable trades.
Brokerage firms such as WCM have a responsibility to sufficiently supervise all of their representatives and must take the necessary provisions to ensure that their registered financial professionals abide by all securities rules and regulations. When firms like WCM fail to properly supervise their representatives, they may become liable for investment losses suffered by customers.
If you invested with any of these former WCM executives and brokers and suffered investment losses, you may be entitled to recover your losses through FINRA arbitration:
KlaymanToskes encourages investors who did business with any of the brokers listed above, Jamie John Worden, and/or Worden Capital Management LLC, to review their portfolios for signs of broker misconduct, excessive trading, and/or investment losses. Contact Lawrence L. Klayman, Esq., at 888-997-9956, or lklayman@klaymantoskes.com to discuss your potential case.
About KlaymanToskes
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 has recovered more than $250 million for investors in FINRA arbitrations and over $350 million in other securities litigation matters for its clients. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Contact
Lawrence L. Klayman, Esq.
888-997-9956