South Florida Arbitration & Litigation Lawyer Blog
FINRA Fraud, Misrepresentation and Mismanagement Arbitration Attorney, Russell L. Forkey, Esq.
July, 2011:
John Francis Means (CRD #2263604, Registered Representative, Lutherville, Maryland) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Means consented to the described sanction and to the entry of findings that he exercised discretionary power in customers’ accounts without obtaining the customers’ prior written authorization and his member firm’s written acceptance of the accounts as discretionary at the time. The findings stated that Means engaged in excessive and unsuitable trading in the accounts, which resulted in substantial losses. The findings also stated that Means recommended and effected transactions pursuant to, and in furtherance of, a strategy he recommended of engaging in high frequency trading to generate income. The findings also included that Means did not have reasonable grounds for believing that the recommended strategy, and the transactions he recommended in implementing it, were suitable for the customers because the trading strategy involved high transaction costs that over the entire period resulted in an annualized cost-equity ratio of about 35 percent; the trading was done using margin, which exacerbated the high transaction costs; and he recommended that the customers use funds borrowed against their primary residence and a vacation home they owned to engage in the trading activity. FINRA found that in connection with his recommendations, Means failed to disclose to the customers the risks associated with trading on margin and the risks associated with the strategy of engaging in high frequency trading to generate income. (FINRA Case #2010021910201).