FINRA Bars Craig Scott Capital Broker For Churning
Edward Beyn of New York New York a stockbroker formerly registered with Craig Scott Capital LLC is the subject of a Financial Industry Regulatory Authority (FINRA) National Adjudicatory Council Decision which affirms FINRA’s Hearing Panel’s decision to bar Beyn because (1) Beyn effected excessive trades in customer accounts (2) Beyn churned customers’ investment portfolios and (3) Beyn made unsuitable investment recommendations. In the Matter of Department of Enforcement v. Edward Beyn et. al. Complaint Nos. 2015044823501 and 2015044823502 (Jan. 29, 2019).
Beyn was barred by FINRA’s Hearing Panel in all capacities for having excessively traded and churned Craig Scott Capital customer accounts, and making investment recommendations that were not suitable for customers; conduct violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010, 2111, 2020. The National Adjudicatory Council, when reviewing the Extended Hearing Panel’s Decision, found there was nothing to suggest that its bar of Beyn was inappropriate.
Specifically, Beyn reportedly engaged in a pattern of excessive trading in customer accounts; the conduct of Beyn was intentional. Apparently, Beyn steered his customers towards trusting him with their investments. However, by Beyn effecting trades in customers’ accounts, he caused customers to incur substantial costs and assume very high risk with little chances of generating profits.
Ultimately, customers reportedly sustained significant losses because of Beyn’s trading; all while the firm and Beyn accumulated significant profits. Critically, Beyn reportedly assumed no responsibility for having harmed the customers; he claimed that customers approved his accounts even though customers were not apprised as to the costs of investing, high cost-to-equity ratios; and high turnover rates which were slated to benefit the firm instead of the customers. Moreover, National Adjudicatory Council found that Beyn had not taken any steps to remediate customers.
Consequently, FINRA found that Beyn had no business being in the securities industry; that he is a danger to investors because of his failure to abide by regulations and rules meant to ensure investor protection.
FINRA Public Disclosure confirms that Beyn is referenced in seven additional customer initiated investment related disputes pertaining to allegations of Beyn’s violative conduct during the time that he was associated with Craig Scott Capital, LLC. Particularly, a customer initiated investment related arbitration claim involving Beyn’s conduct was settled for $178,500.00 in damages founded on accusations that Beyn negligently transacted in the customer’s account, and executed exchange traded notes, over-the-counter equities and stock trades in the customer’s account that were neither suitable nor authorized by the customer. FINRA Arbitration No. 13-0442 (Apr. 16, 2015).
Then, a customer filed an investment related arbitration claim regarding Beyn’s activities in which the customer sought $200,000.00 in damages based upon allegations that the customer’s account transactions were negligently supervised; fiduciary duties owed to the customer had been breached; transactions were executed in violation of federal securities laws; equity trades effected in the customer’s account were not suitable for the customer; investment information had been misrepresented to the customer; and the customer was defrauded. FINRA Arbitration No. 14-02365 (Aug. 22, 2014).
Subsequently, a customer filed an investment related arbitration claim concerning Beyn’s conduct where the customer requested $1,000,000.00 in damages supported by accusations that Beyn breached his fiduciary obligations to the customer, negligently transacted in the customer’s account, and made inappropriate trades of speculative stock and over-the-counter equities in the customer’s investment portfolio. FINRA Arbitration No. 15-00735 (Apr. 20, 2015). Further, on July 22, 2015, a customer filed an investment related complaint concerning Beyn’s activities in which the customer sought $65,000.00 in damages founded on allegations that from January of 2015 to May of 2015, trades were executed in the customer’s account on an excessive basis, where Beyn would purchase a securities position and sell it the following day at a loss supposedly to generate a commission; and Beyn charged the customer commissions on over-the-counter equities that exceeded the amount represented to the customer.
Further, Beyn was subject of a customer initiated investment related arbitration claim where the customer was awarded $50,000.00 in compensatory damages based upon Beyn being found liable on the customer’s claims of engaging in securities fraud in violation of SEC Rule 10b-5; making misrepresentations to the customer; trading in the customer’s account without the customer’s consent; churning the customer’s investment portfolio; and placing the customer in securities that were not suitable for the customer given the customer’s objectives for investing.
Beyn’s registration with Craig Scott Capital LLC was terminated on September 16, 2015.
Every firm with which Beyn has been associated has been expelled from FINRA or is otherwise defunct.
Craig Scott Capital LLC was expelled from FINRA in September 2017.