California Advisor Suspended and Fined for Churning Client Accounts

Posted on October 1st, 2024 at 3:34 PM
California Advisor Suspended and Fined for Churning Client Accounts

From the desk of Jim Eccleston at Eccleston Law

A veteran advisor in Santa Maria, California, Stewart "Paxton" Ginn, has been suspended for 18 months and fined $50,000 by FINRA, according to AdvisorHub. In addition, Ginn was also ordered to pay $115,000 in restitution for churning five customers' accounts, according to a settlement finalized on August 29. Churning refers to excessive trading to generate commissions, often at the expense of the client’s financial well-being.

From July 2020 to December 2022, Ginn generated over $2.24 million in commissions while causing $2.22 million in losses for his clients, one of whom was an elderly woman suffering from Alzheimer’s disease. Ginn, who was registered with Independent Financial Group (IFG), engaged in frequent buying and selling of large equity positions, charging commissions up to 3 percent per transaction, according to FINRA.

FINRA found that Ginn failed to explain the total commissions charged or to discuss the cumulative costs with his clients. The excessive trading resulted led to cost-to-equity ratios as high as 27 percent, making it nearly impossible for his clients to achieve any profit. These actions violated the Securities and Exchange Commission’s Regulation Best Interest and FINRA Rule 2010, which mandates high standards of commercial honor.

Additionally, FINRA noted that Ginn traded without proper authorization in at least four of the five accounts. Most of his clients, including retirees and a dental practice's profit-sharing plan, did not have aggressive risk tolerances. Ginn inherited these accounts after a colleague’s sudden death in 2019.

Although Ginn consented to the sanctions without admitting or denying FINRA’s findings, IFG has settled three customer claims related to his conduct for a combined $1.25 million. Two additional claims, seeking $1.85 million, remain pending, with Ginn denying any wrongdoing.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

If you are being bothered by the Regulators, call Eccleston Law, you won't regret it.

Rick R.

LATEST NEWS AND ARTICLES

November 11, 2024
Charles Schwab Faces Multiple Lawsuits Alleging Elder Fraud Neglect

Charles Schwab and its affiliates are under scrutiny after recent lawsuits allege the firm failed to prevent scammers from defrauding elderly clients.

November 8, 2024
Former Advisor Faces Lawsuit Over Alleged Mishandling of Premium-Financed Life Insurance Plan

Joshua L. Gottlieb, barred by FINRA in 2017, faces a lawsuit alleging significant financial harm to a client following the sale of a premium-financed indexed universal life (IUL) insurance program. 

November 7, 2024
Fidelity Data Breach Exposes Sensitive Information of Over 77,000 Customers

According to InvestmentNews, Fidelity Investments recently disclosed a data breach affecting tens of thousands of customers, exposing sensitive personal data such as Social Security numbers and driver’s license information.