Western International Securities Fined Over $1.5 Million for Failing to Detect Churning

Posted on October 8th, 2024 at 3:45 PM
Western International Securities Fined Over $1.5 Million for Failing to Detect Churning

From the desk of Jim Eccleston at Eccleston Law

Western International Securities, a California broker-dealer, has been ordered to pay over $1.5 million for failing to detect churning in 100 customer accounts. The settlement, reached with the Financial Industry Regulatory Authority (FINRA), includes a $475,000 fine and nearly $1.06 million in restitution to eight customers who were charged excessive commissions due to unsuitable trading.

FINRA found four former Western advisors generated over $2.5 million in total trading costs between January 2016 and December 2019. These trading fees represented up to 30 percent of the accounts' equity value and had a turnover rate of eight, exceeding FINRA's benchmarks for potentially excessive trading.

According to AdvisorHub, until early 2019, Western relied on trade blotter-based surveillance that did not include cost-to-equity ratios, turnover rates, or other indicators of excessive trading. Additionally, Western failed to provide field supervisors with proper guidance on evaluating excessive trading and did not mandate reasonable follow-up actions.

Western’s compliance department used “negative consent” letters to inform customers about trading in their accounts, taking no action if customers did not respond. Later, Western required customers to sign attestations agreeing with their brokers’ trading activity but failed to explain the firm’s concerns.

The firm accepted the penalty, known as an Acceptance, Waiver, and Consent (“AWC”), without admitting or denying the charges.

 

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

Thank you so very much for your guidance, patience, and expertise.

Beth and Steve K.

LATEST NEWS AND ARTICLES

September 17, 2025
FINRA Suspends Centaurus Dallas Broker Over Excessive Alternative Investment Sales

FINRA has suspended a Centaurus Financial broker, William Burks, for four months after finding he placed as much as 91 percent of a client’s net worth into illiquid alternative investments.

September 16, 2025
Former Morgan Stanley Advisors Win Partial Court Victory in Client Solicitation Dispute

Two former Morgan Stanley advisors in Hackensack, New Jersey have defeated Morgan Stanley’s initial effort to block them from soliciting clients, according to an August 15 order from New Jersey Superior Court.

September 15, 2025
California Young-Gun Investor Charged in Alleged $6 Million Ponzi Scheme

Federal prosecutors have accused Mihir Deepak Sukthankar, a California resident once celebrated as a teenage trading “prodigy,” of orchestrating a multi-million-dollar Ponzi scheme.