Securities Lawyers Blog
According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker David Hackney (Hackney) has recently been permanently barred by the agency for failing to respond to requests for documents and information. In addition, the broker has been under investigation by the Illinois Securities Department concerning allegations that Hackney churned – a type of securities fraud – at least three accounts.
Hackney entered the securities industry in 1993. From March 2006 until February 2014, Hackney was associated with LPL Financial LLC (LPL). In February 2014, LPL discharged Hackney alleging that the broker conducted discretionary, otherwise known as unauthorized trades, in customers’ accounts that were excessive.
Investment churning is trading activity characterized by the purchasing and selling of securities including stocks, bonds, mutual funds, and options that is excessive and serves no practical purpose for the investor. Brokers engage in churning solely to generate commissions without regard for the client’s interests. In order to establish a churning claim the investor must show that the trading was first excessive and second that the broker had control over the investment strategy. 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.