Securities Lawyers Blog
According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker David Peirce (Peirce) has been the subject of at least four customer complaints. The customer complaints against Peirce allege a number of securities law violations including that the broker made unsuitable investments, churning (excessive trading), among other claims..
Peirce entered the securities industry in 1989. From April 2004, until February 2009, Peirce was registered with Morgan Stanley Smith Barney (Morgan Stanley). From June 2009 onward Peirce was associated with RBC Capital Markets, LLC (RBC).
All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. Many of the claims against Peirce involving claims of churning and excessive trading. When brokers engage in churning the investment trading activity in the client’s account serves no reasonable purpose for the investor and is transacted to profit the broker through the generation of commission payments. The elements to establish a churning claim, which is considered a species of securities fraud, are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. 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.