FINRA Fines Securities America Broker For Excessive Trading

Michael Dennis Jackson of University Place Washington a stockbroker formerly registered with Securities America Inc. has been fined $10,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that (1) Jackson engaged in selling away (2) Jackson effected unauthorized trades in customer accounts and (3) Jackson executed trades in customer accounts on an excessive basis. Letter of Acceptance Waiver and Consent No. 2017055684102 (Dec. 10, 2018).

According to the AWC, between October 2016 and 2017, a total of forty-two options strategies, consisting of at least one hundred transactions, were effected by Jackson in an account that a customer established at another brokerage firm with Jackson’s help. The AWC stated that Jackson made decisions about the options to purchase and the placement of those orders even though he did not communicate with the customer beforehand and the customer had not provided Jackson with authorization to effect the transactions. The AWC stated that Jackson never informed the other institution about Jackson being associated with Securities America Inc. at the time that he placed trades in the customer’s account.

The AWC then stated that Jackson caused the customer to incur loses beginning in December 2016 because of his trading of the options. Evidently, the customers’ losses grew in 2017, during which time orders had been placed by Jackson at a higher rate. Jackson apparently closed the customers’ positions out shortly after they had been opened by him. Critically, the AWC stated that Jackson caused the customer’s account to dwindle to just over $2.00 by the time that he was done transacting in the customer’s account. FINRA stated that Jackson caused the customer’s account to sustain a thirty-one percent cost-to-equity ratio. Consequently, a complaint was filed by the customer about what transpired.

FINRA stated Jackson’s placement of orders at the outside institution without providing notice to the firm was violative of FINRA Rules 3050 and FINRA Rule 3280. Moreover, FINRA found Jackson’s unauthorized discretion in the customer’s account to be violative of National Association of Securities Dealers (NASD) Rule 2510. Further, FINRA found that Jackson’s trading was excessive and therefore violative of FINRA Rule 2111 – FINRA noted the customers’ cost-to-equity ratio was fifty percent more than what FINRA normally considers as a determinant of excessive trading.

FINRA Public Disclosure confirms that Jackson is referenced in four additional customer initiated investment related disputes pertaining to allegations of Jackson’s violative conduct during the time he was employed by Securities America Inc. Particularly, on August 19, 2014, a customer filed an investment related complaint concerning Jackson’s conduct in which the customer requested $50,000.00 in damages supported by accusations that Jackson made misrepresentations to the customer concerning investments, executed unsuitable trades in the customer’s account, and effected transactions without permission.

On May 22, 2017, another customer initiated investment related complaint involving Jackson’s activities was resolved for $66,500.00 in damages founded on allegations against Jackson of unsuitable trading of equities in the customer’s account. Thereafter, a customer initiated investment related complaint concerning Jackson’s conduct was settled for $12,058.42 in damages based upon accusations that Jackson placed the customer in a bad investment strategy which caused the customer to incur investment losses. Thereafter, a customer initiated investment related arbitration claim regarding Jackson’s activities was resolved for $32,500.00 in damages supported by allegations of breach of contract, misrepresentation, breach of fiduciary duty, negligence and unsuitable exchange traded notes transactions. FINRA Arbitration No. 18-00897 (May 1, 2018).

FINRA Public Disclosure confirms that on October 13, 2017, Securities America Inc. discharged Jackson founded on accusations of his unauthorized trading.