Worden Capital Stockbroker Barred For Churning
Gregory Thomas Dean of Rockville Centre New York a stockbroker employed by Worden Capital Management LLC has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that (1) Dean churned a customer’s investment account and (2) Dean made unsuitable and excessive trades in customer accounts. Letter of Acceptance Waiver and Consent No. 2017052699901 (Aug. 15, 2019).
According to the AWC, from December of 2014 to December of 2017, during the period in which Dean was employed by Worden Capital Management, he executed trades on an excessive and unsuitable basis in the accounts of at least seven customers. Trading decisions had been made by Dean; he determined when and what to purchase or sell for their accounts. Dean reportedly convinced those customers to follow along with his recommendations and to allow him to control their accounts.
The AWC stated that Dean’s investment strategy, which involved in-and-out trades being executed on a short-term basis, demonstrated no regard for the interests of his customers. The AWC stated that in customer WC’s case, a total of ninety-three trades were effected from December 18, 2015 to August 31, 2017. WC’s accounts contained an annual 72.09 percent cost-to-equity ratio and 30.99 annual turnover rate. This caused WC to pay commissions of $17,000.00 and incur $77,274.00 in losses. In another case involving customer RC, a total of six hundred thirty-five trades had been executed in the customer’s account from May 18, 2015 to September 7, 2017. Dean’s trading caused RC to incur an 83.85 percent cost-to-equity ratio and 92.12 turnover rate. RC reportedly paid commissions of $297,797 and margin interest of $76,586.00; however, RC suffered $1,295,625.00 in losses.
Customers’ investment profiles did not support trades Dean made in the accounts of the seven customers. In sum, commissions totaling $715,930 had been paid by customers but they sustained losses totaling $1,834,832.00 . FINRA stated that it was almost impossible for customers to generate a profit given the trading activity in their accounts; yet, Dean stood to make commissions from those customers through his flawed investment strategy. FINRA found Dean’s conduct violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010, 2020, 2111.
This is not the first time Dean has been sanctioned by a securities regulator. Actually, SEC obtained a final judgment against Dean mandating that he pay, among other things, a $253,881.98 civil penalty based on Dean’s unauthorized trading in accounts owned by J.D. Nicholas customers; omissions and false or misleading statements in regard to investments; and bad recommendations to customers resulting in their losses. Securities and Exchange Commission v. Gregory T. Dean et al. Case No. 17-CV-139 (June 10, 2019). Dean’s conduct was allegedly violative of Securities Exchange Act of 1934 Section 10(b), Securities Act of 1933; and Rule 10b-5. The stockbroker reportedly admitted to having made reckless recommendations and that he engaged in conduct violative of federal securities laws.
Dean has also been barred by SEC from being a stockbroker or investment adviser representative or otherwise associating with any securities broker dealers or investment advisories according to an Order Instituting Administrative Proceedings referencing findings of Dean’s fraudulent activities having victimized thirteen customers. In the Matter of Gregory T. Dean Administrative Proceeding File No. 3-19217 (June 26, 2019).
FINRA Public Disclosure also confirms that Dean is referenced in sixteen customer initiated investment related disputes that concern accusations of his misconduct when he was associated with securities broker dealers including J.D. Nicholas Associates Inc. and Worden Capital Management. In fact, a customer initiated investment related arbitration claim concerning Dean’s activities was resolved for $60,000.00 in damages supported by allegations of negligent supervision; breach of contract; breach of fiduciary duty; unsuitability; churning and fraud in regard to stock and over-the-counter equities traded in the customer’s account. FINRA Arbitration No. 17-01971 (June 1, 2018).
Another customer initiated investment related arbitration claim in regard to Dean’s conduct was settled for $55,000.00 in damages founded on accusations that contractual obligations to the customer had been violated; unfounded statements were made concerning investments; the customer’s account was administered negligently; fiduciary obligations had been breached; margin was inappropriately utilized; trades were executed in the customer’s account on an excessive basis; and transactions effected in the customer’s account failed to be suitable. FINRA Arbitration No. 17-01497 (June 6, 2018).
Dean is also referenced in a customer initiated investment related arbitration claim where the customer sought $70,766.80 in damages based upon allegations that trades were executed on an unsuitable basis; and the customer’s investment portfolio had been churned. FINRA Arbitration No. 19-00369 (Feb. 19, 2019). Another customer filed an investment related arbitration claim involving Dean’s activities in which the customer sought $25,919.00 in damages supported by accusations of omissions; misrepresentation; breach of contract; breach of fiduciary duty; and negligence regarding over-the-counter equities and stock trades placed in the customer’s account. FINRA Arbitration No. 19-01580 (July 1, 2019).
Dean was discharged by Worden Capital Management LLC on June 26, 2019.