Investor Alert - William Athas of SW Financial Under Investigation by FINRA
As disclosed by the Financial Industry Regulatory Authority (FINRA), on September 14, 2020, “FINRA made a preliminary determination to recommend that disciplinary action be brought against [William] Athas alleging violation of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and FINRA Rules 2020 and 2010” with respect to allegations of churning in certain customer accounts. In addition, FINRA’s investigation also concerned allegations of unsuitable recommendations via excessive trading, unsuitable concentration and unsuitable recommendations including through the use of margin, pursuant to FINRA Rules 2111 and 2010.
William Athas (Athas, CRD# 3165470) is a longtime securities industry professional with more than two decades of experience as a stockbroker. Mr. Athas first entered the financial services industry in 1999 and has been affiliated with twelve different firms over the course of his career. From July 2016 to August 2020, Athas was affiliated with Worden Capital Management LLC (Worden Capital) in that brokerage firm’s Melville, Long Island office. Most recently, since August 24, 2020, Athas has been affiliated with SW Financial of Melville, NY.
According to FINRA BrokerCheck, Mr. Athas has disclosed a total of nine customer complaints over the course of his career, including six matters which resulted in a settlement and one pending customer dispute. Notably, the most recently initiated customer dispute filed in May 2020, seeking damages of $84,932, concerns allegations that Mr. Athas engaged in “unsuitable trading” and “churning.”
Excessive trading occurs where (1) a financial advisor exercises control over a customer’s account, and (2) the level of activity in that account is inconsistent with the customer’s investment objectives, financial situation, and needs. Excessive trading constitutes a violation of industry standards under FINRA Rule 2111 (Suitability). In determining whether trading is excessive, the use of certain factors and corresponding statistical formulas is commonplace, including analyzing an account’s turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account.
Furthermore, under applicable FINRA rules, brokerage firms like Worden Capital and SW Financial have an affirmative legal duty to supervise their employees and affiliated persons. Specifically, under FINRA Rule 3110 (NASD Rule 3010), brokerage firms must “establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance” with applicable FINRA rules, in addition to state and federal securities laws. It is critical for broker-dealers to not only establish such a supervisory system, but further to properly maintain their supervision, by among other things, periodically meeting with individual financial advisors to discuss, among other things, the products they are selling and their sales methods, as well as account activity including trading activity relative to a customer’s investment objectives, stated risk tolerance, and financial situation and needs.
In instances where a customer suffers losses due to excessive trading, or account churning, then the brokerage firm may be held liable for any failure to adequately supervise their employee. The attorneys at Giarrusso Law Group LLC have significant experience in working closely with investors to resolve all manner of issues concerning investment losses, including losses suffered due to excessive trading, churning, or other misconduct. Investors may pursue a claim to recover monies through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim may contact us by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost, confidential consultation.