The most recent complaint was filed in January 2017 and alleged negligence, breach of fiduciary duty, and breach of contract causing over $2 million in losses. In August 2016, another customer filed a complaint alleging that from Spring 2014 to Spring 2015, Anthony made unsuitable investments and was churning (excessively trading) in the account leading to $100,000 in damages. These two complaints are currently pending in FINRA arbitration.
In April 2015, Christopher Anthony was terminated from his position at Rhodes Securities Inc. for failing to supervise, trading with discretion, and trading outside the investment objectives of his clients’ accounts. He is currently not registered with any securities firm.
Anthony entered the securities industry in 1983. Although he is not currently registered with any securities firms, he was associated with the following firms throughout his career:
• Principal Financial Group, Inc. (August 1983 – January 1995)
• Absolute Investments, Inc. (December 1994 – June 1995)
• Rhodes Securities, Inc. (June 1995 – April 2015)
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades.
Churning is considered a species of securities fraud. The elements of the claim are:
• Excessive transactions of securities
• Broker control over the account
• Intent to defraud the investor by obtaining unlawful commissions
Excessive Trading is a similar claim and under FINRA’s suitability rule it involves just the first two elements of the churning claim. When evaluating a churning claim, certain commonly used measures and ratios assist in determining whether churning tactics were used by the broker. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.
According to Investment News, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. A Wall Street Journal (WSJ) story has proven that FINRA’s broker records are often incomplete or inaccurate. The WSJ story researched 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on FINRA’s BrokerCheck system. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.
The investment fraud attorneys at Gana Weinstein LLP represent investors who have suffered securities losses due to the mishandling of their accounts. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.