stockbroker misconduct

Mason Wayne Gann of Dallas Texas a stockbroker formerly registered with Berthel Fisher Company Financial Services has been suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that defrauded an elder customer by engaging in unsuitable options trading. Letter of Acceptance Waiver and Consent No. 2018057425201 (Jan. 27, 2020).

According to the AWC, a seventy-one year old investor’s account had been serviced by Gann at Berthel Fisher beginning in 2012. The AWC stated that the customer, who was retired and depending on his investments and social security for income, placed the near entirety of his net worth – $205,000.00 – in the Berthel account. The customer’s account was subject to ongoing withdrawals which at one point exceeded more than fifteen percent of the customer’s account value.

FINRA indicated that JM was advised by Gann to begin making options trades to produce more income since the customer’s account had been reduced to below $120,000.00 by August of 2015. The AWC indicated that the customer maintained next to no experience with options trading but still took Gann’s advice. In fact, from August of 2015 to January of 2018, the customer acted on Gann’s directions, purchasing 22 call and put options, writing 6 uncovered put options and 20 covered call options. FINRA stated that these transactions were in no way suitable for the customer given the risks pertaining to purchasing calls and puts and also the risks of writing uncovered puts.

FINRA indicated that the calls and puts purchased for JM’s account as a result of Gann’s advice were generally sold prior to the options expiring but there were at least four options which had expired worthless. The AWC stated that one of those four options, which cost Gann $11,538.00, had been purchased when the customer’s account was valued at around $72,000.00. FINRA noted that the transaction resulted in a fifteen percent decline in the customer’s account. In addition, the regulator stated that losses were incurred by JM because of the naked put option recommendations made by Gann. FINRA concluded that Gann’s options strategy was not suitable for the customer and led the customer to experience undue losses. In fact, the customer’s account dwindled to $20,000.00 by January of 2018. Gann’s conduct was violative of FINRA Rules 2010 and 2111.

This is not the first time that Gann has been sanctioned by FINRA for misconduct. In particular, he was fined $5,000.00 and suspended in all capacities based upon consenting to findings of him effecting trades without permission. Letter of Acceptance Waiver and Consent No. 2015043584401 (Apr. 11, 2018).

According to the AWC, at least five hundred trades were effected by the stockbroker on a discretionary basis even though this type of trading was disallowed by the securities broker. Gann failed to secure written permission from Berthel Fisher or customers to exercise discretion. FINRA found Gann’s conduct violative of FINRA Rule 2010 and NASD Conduct Rule 2510(b).

FINRA Public Disclosure reveals that Gann has been identified in three customer initiated investment related disputes concerning accusations of his misconduct when he was employed by Berthel Fisher Company Financial Services. In particular, a customer filed an investment related complaint in reference to Gann’s conduct where the customer sought more than $5,000.00 in estimated damages based upon accusations that the customer’s account was churned resulting in unwarranted losses on options and common stocks.

Another customer initiated investment related arbitration claim pertaining to Gann’s conduct was settled on October 30, 2018 for $31,250.00 in damages supported by allegations that misleading statements had been made concerning the risks of exchange traded funds, stocks and commodity options, the customer’s account had been inappropriately managed, investments failed to align with the customer’s risk tolerance or investment objectives, and Berthel Fisher neglected to supervise Gann’s activities in the customer’s account. FINRA Arbitration No. 18-02325 (Oct. 30, 2018).

Gann has also been identified in a customer initiated investment related arbitration claim which was resolved for $40,000.00 in damages on January 22, 2019 founded on accusations of unsuitable investment transactions by the stockbroker, inadequate supervision of the customer’s account, and unauthorized transactions causing the customer to experience losses on exchange traded funds, unit investment trusts, options and equities.

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