FINRA Charges SW Financial Stockbroker With Churning

James William Flower (also known as Jim Flower) of Melville New York a stockbroker formerly registered with SW Financial has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that the stockbroker excessively traded and churned the accounts of five SW Financial customers causing them grave losses at the same time that the stockbroker made large commissions from them. Department of Enforcement v. James W. Flower Disciplinary Proceeding No. 2017052701101 (Apr. 10, 2020).

According to the Complaint, from January 1, 2016 to July 31, 2018, customers’ accounts at SW Financial were excessively traded by Flower. Those customer accounts allegedly contained annual turnover rates that ranged between sixteen and thirty-three with annual cost-to-equity ratios that ranged between sixty-nine percent and more than one hundred seventy-six percent. FINRA indicated that Flower caused customers to realize $220,000.00 in losses at the same time as he accumulated $210,000.00 in fees and commissions from them. The Complaint indicates that Fowler’s trading made it nearly certain that customers would lose money.

Fowler allegedly engaged in churning in violation of FINRA Rules 2010, 2020 and 2111 as well as Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5. The Complaint alleges that Fowler’s unsuitable trading was violative of FINRA Rules 2010 and 2111 and that his unauthorized trading was violative of Rule 2010. FINRA also indicated in the Complaint that Flower caused SW Financials’ records and books to be inaccurate because of the stockbroker’s mismarking of order tickets. Department of Enforcement contends that Flower’s conduct in this regard violated Rules 2010 and 4511.

This is not the first time that Flower has been the subject of a FINRA disciplinary action regarding his alleged misconduct in the securities industry. Namely, the stockbroker has been suspended from associating with any FINRA member in any capacity based upon consenting to findings that he gave bad investment advice to thirteen customers regarding iPath S&P 500 VIX Short Term Futures ETN which caused his customers to experience more than $249,000.00 in losses. Letter of Acceptance Waiver and Consent No. 2014040644001 (June 12, 2017). FINRA determined that Flower’s conduct was violative of FINRA Rules 2010 and 2111.

FINRA Public Disclosure reveals that Flower has been identified in four customer initiated investment related disputes containing allegations of his misconduct while employed with securities broker dealers including Laidlaw and Global Arena Capital Corp. He is the subject of a customer initiated investment related arbitration claim in which the customer requested $250,000.00 in damages based upon allegations that the customer’s account was churned and had been excessively traded by Flower. According to the claim, margin was excessively used to effect unsuitable equities transactions in the customer’s account. FINRA Arbitration No. 15-02278 (Sept. 18, 2015).

Another customer initiated investment related complaint involving Flower’s conduct was settled for $45,000.00 in damages on November 12, 2015 based upon allegations that over-the-counter equities and stock transactions effected in the customer’s account were not suitable for the Laidlaw customer.

Flower’s registration with SW Financial has been terminated as of June 3, 2019. He has been associated with Spartan Capital Securities LLC since June 13, 2019.