FINRA Sanctions EDI Stockbroker For Unauthorized Trading
William Stafford Thurmond of New York New York a stockbroker formerly employed by EDI Financial Inc. has been fined $25,000.00 and suspended for fifteen months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that (1) Thurmond executed unauthorized trades in the customer’s account and (2) Thurmond made unsuitable investment recommendations to a customer of the firm while he was associated with EDI Financial Inc. Letter of Acceptance Waiver and Consent No. 2016048867401 (Apr. 12, 2019).
According to the AWC, Thurmond serviced the account of customer AA beginning in June of 2017. Apparently, AA’s new account documentation indicated that the customer sought preservation of capital while also achieving growth and speculation – inconsistent objectives for investing that Thurmond supposedly never clarified. Moreover, the documentation evidently indicated that AA did not have substantial experience investing in options, stocks, bonds and margin based transactions. The AWC stated that at the time AA’s investable assets grew to $500,000.00, AA reportedly told Thurmond that he did not want his principal to be placed at risk. Thurmond supposedly never modified AA’s investment account profile to reflect AA’s more conservative tolerance for risk.
Eventually, AA designated his brother, SA, as AA’s agent so that the near entirety of AA’s savings account could be transferred to EDI Financial. However, after funds were transferred from AA’s bank account to his EDI Financial account, Thurmond proceeded to invest AA’s funds in non-traditional exchange traded funds, including inverse-leveraged exchange traded funds which were not suitable for the customer. In sum, Thurmond effected forty-five inappropriate trades, totaling $328,000.00, in the customer’s account.
The AWC revealed that eighteen of the trades were placed by AA without Thurmond either obtaining AA’s or SA’s permission. Supposedly, the inverse-leveraged and leveraged exchange traded funds were held in the customer’s account for extended holding periods – more than one hundred fifty days on average – which ran contrary to the holdings periods identified within the non-traditional exchange traded funds prospectuses.
FINRA indicated that Thurmond’s trading was not suitable given the customer’s liquidity, tolerance for risk and financial experience. The regulator also concluded that AA’s investments were held for unwarranted periods. Ultimately, a total of $42,724.00 in commissions has been generated by Thurmond from the trades he placed in the customer’s account; however, the customer incurred $212,731.00 in investment losses. Consequently, FINRA found that Thurmond’s conduct was violative of FINRA Rules 2010, 2111 and National Association of Securities Dealers (NASD) Rule 2310.
FINRA Public Disclosure confirms that Thurmond is referenced in four customer initiated investment related disputes pertaining to allegations of his violative conduct during the time that he was associated with firms including E.F. Hutton Co. Inc., Dickinson Co. and EDI Financial Inc. Particularly, a customer initiated investment related civil action involving Thurmond’s activities was resolved for $60,698.00 in damages founded on accusations that misrepresentations had been made to the customer; contractual obligations to the customer were breached; the customer had been defrauded; and the customer’s account was handled negligently.
Thereafter, a customer initiated investment related arbitration claim regarding Thurmond’s conduct was settled for $50,000.00 in damages based upon allegations that unauthorized trades had been executed in the customer’s account; and misrepresentations and omissions were made concerning those investments. Thurmond was later subject of a customer initiated investment related arbitration claim in which the customer was awarded $212,731.00 in damages according to EDI Financial Inc. being found liable on the customer’s claims that fiduciary duties owed to the customer had been breached; the customer was victim to fraudulent activities; trades were placed in the customer’s account without the customer’s permission; transactions were not appropriate for the customer and had been handled in a negligent manner; and the customer’s account was churned. FINRA Arbitration No. 14-01822 (Jan. 20, 2016).
Thurmond’s registration with EDI Financial Inc. has been terminated as of December 31, 2016. Between December 14, 2016 and May 12, 2017, Thurmond was registered with Alexander Capital L.P.