FINRA Suspends Broker Over Reg BI Violations
The Financial Industry Regulatory Authority has suspended a broker for 18 months for violating Regulation Best Interest’s care obligation.
According to the order, from December 2016 through April 2022, Tory Duggins recommended a series of excessive trades to eight clients, three of whom were older adults. He was with Spartan Capital Securities in New York during this time, having joined the firm in early 2016.
During the time period, Duggins engaged in quantitatively unsuitable trading in the eight customer accounts, which resulted in high cost-to-equity ratios and turnover rates that were well above the traditional guideposts of 20% and six, respectively, as well as significant losses, the order states.
Specifically, Duggins’ trading in the eight accounts resulted in annualized cost-to-equity ratios of 58% to 289% and annualized turnover rates of 14.36 to 63.24 while generating total trading costs of $444,176, including $343,416 in commissions, and causing $235,494 in total realized losses, the order states.
One client — a 68-year-old retiree — opened an individual retirement account at Spartan Capital with Duggins in October 2018.
According to the client’s new account documentation, his investment objective was aggressive growth.
“From October 2018 through October 2021, Duggins recommended 305 transactions in [the customer’s] IRA resulting in an annualized cost-to-equity ratio of 59% and an annualized turnover rate of 14.82,” according to the order.
“Duggins’ trading in [the customer’s] IRA generated total trading costs of $123,953, including $101,024 in commissions, and caused $92,995 in realized losses,” it stated.
