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FINRA Permanently Bars Former Caldwell International Securities Corp. Broker for Churning Clients’ Accounts and Failing to Disclose Unsatisfied Judgments and Liens

On August 6, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Rasheed (Richard) Adams (“Adams”), a former broker at Caldwell International Securities Corporation (“CISC”), was barred from the financial services industry for various violations of the securities laws, including, but not limited to, excessive trading and churning in his clients’ accounts and his failure to amend his Form U4 to disclose unsatisfied judgments and liens.

According to the FINRA Letter of Acceptance, Waiver and Consent, Adams first became associated with CISC in June 2011 when his firm, Adams Wealth Management, Inc., became an Office of Supervisory Jurisdiction for CISC. From July 1, 2013 to June 30, 2014, Adams excessively traded and churned two of his clients’ accounts, resulting in losses of approximately $37,000 and commissions of approximately $57,000. Adams’ trading was inconsistent with his clients’ investment objectives and risk tolerance, and was a clear breach of his fiduciary duty. In the course of their investigation, FINRA requested documents and information from Adams on multiple occasions; however, Adams refused to comply and told FINRA that he would not provide the documents and information at any time, in violation of FINRA rules.

In addition to these charges, Adams also allegedly violated FINRA’s by-laws that require associated persons to update their Forms U4 such that they are “current at all times.” Adams was aware of, and did not disclose, twelve (12) unsatisfied judgments and liens on his Form U4, which was in effect from 2010 through 2014. Despite having received a notice from FINRA, Adams still did not update his Form U4 until December 3, 2013, the day prior to his testimony before FINRA. Adams’ actions demonstrated a willful violation of FINRA rules and securities law.

Without admitting or denying these charges, Adams accepted FINRA’s findings.

Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, stated, “A key element of retail investor protection is the aggressive pursuit of brokers who churn and excessively trade customer accounts. FINRA has no tolerance for brokers who place commissions ahead of what is suitable and appropriate for their customers.”

Where churning or excessive trading is suspected, Lax & Neville LLP works with financial experts to review the customer’s account to determine whether churning transpired.

The attorneys at Lax & Neville LLP have extensive experience in representing customers with churning claims and can formulate a strategy to potentially recover your losses. If you have suffered losses due to your broker’s or investment advisor’s excessive trading and churning, contact Lax & Neville LLP today at (212) 696-1999 and schedule a consultation.

Source: https://www.finra.org/sites/default/files/Adams%20AWC%20-%20080615.pdf