Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Christopher Cacace (Cacace), currently associated with J. Streicher & Co. L.l.c., has been subject to at least one disclosable event. These events include one regulatory event. Several of those complaints against Cacace concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.
FINRA BrokerCheck shows a pending customer complaint on August 15, 2024.
Christopher Cacace was named a respondent in a FINRA complaint alleging that while tasked as his member firm’s Chief Compliance Officer (CCO) he failed to reasonably supervise, investigate, and respond to red flags of churning, excessive trading, and unsuitable trading by registered representatives of the firm. The complaint alleges that Cacace never restricted or limited the trading by the firm representatives in their customers’ accounts or took any other meaningful steps to prevent their trading. Although the representatives had extensive regulatory histories and numerous customer complaints related to unsuitable trading, excessive trading, and/or churning, and were the subject of regulatory disclosures that indicated that they were under financial strain, Cacace failed to reasonably supervise them and enabled them to engage in potentially excessive and unsuitable trading, and this trading resulted in extensive customer harm. The firms’ customers incurred losses of $709,444 while the firm and its representatives obtained $546,855 in commissions, fees, and costs.
When brokers indulge in excessive trading, often called churning, they typically buy and sell securities, sometimes even the same stock, repeatedly over a short span of time. Often times the account will completely “turnover” every month with different securities. The only purpose of this kind of investment in the client’s account is to generate commissions, which benefit the broker, but not the investor. Churning is regarded as a specific category of securities fraud. Excessive trading of securities, broker manipulation of the account, and the intent to deceive the investor for illicit commissions form the basis of the claim. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. 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 newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases. In addition, research has shown a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints. These lower quality firms may average brokers with five times as many complaints as the industry average.
Cacace entered the securities industry in 2000. Cacace has been registered as a Broker with J. Streicher & Co. L.l.c. since 2019.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
