FINRA Enforcement Alleges Former Laidlaw Broker Utilized High-Cost In-and-Out Trading Strategy
On September 8, 2020, FINRA’s Department of Enforcement filed a Complaint against Bryan G. Mazliach (CRD# 5518438), a stockbroker affiliated with Laidlaw & Company (UK) LTD (Laidlaw) in its Fort Lauderdale, Florida office. As alleged in the Complaint, Mr. Mazliach “excessively and unsuitably traded five customers’ accounts by recommending and executing in their accounts a high-cost, in-and-out trading strategy.” As further alleged by FINRA, the in-and-out trading strategy cost customers “over $170,000, while generating commissions and fees for Laidlaw and Mr. Mazliach of more than $187,000.”
According to publicly available information, Mr. Mazliach entered the securities industry in 2008. From January 2015 through September 2017, he was affiliated with Laidlaw in that firm’s Fort Lauderdale office. Thereafter, Mr. Mazliach was affiliated with broker-dealer Westpark Capital from late 2017 through December 2018. Currently, Mr. Mazliach is no longer registered with FINRA as a licensed securities professional. Mr. Mazliach has been named or otherwise involved in three customer disputes during his career, each of which resulted in a settlement. Notably, the most recently disclosed customer dispute, which settled in January 2020, concerned allegations of “unauthorized trading and excessive trading.”
As alleged in FINRA’s Complaint, Mazliach utilized a high-cost, in-and-out trading strategy from February 2015 through July 2017. During this time frame, Mr. Mazliach purportedly effected approximately 450 trades across certain customer accounts, of which hundreds of trades were allegedly unauthorized. As set forth in FINRA’s Complaint, the trading at issue allegedly resulted in annualized cost-to-equity ratios of 37% to 218% and turnover rates ranging from 12 to 50. When taken together in the aggregate, Mr. Mazliach’s trading activity, as alleged by FINRA, was excessive in nature and thus quantitatively unsuitable for the customers at issue.
As alleged in the Complaint, Mr. Mazliach purportedly failed to adhere to FINRA Rule 2111 (Suitability): “He failed to perform reasonable diligence to understand the potential risks associated with the investment strategy that he was recommending, namely how the costs associated with an in-and-out trading strategy would impact the ability of the accounts to turn a profit.” As part of the strategy, Mr. Mazliach generally charged his customers commissions between 2 and 2.5% on purchases and 1% or less on sales. Adding to the gravity of the situation, FINRA alleged that Mr. Mazliach “compounded his misconduct by engaging in unauthorized trading” including approximately 420 unauthorized trades placed in 10 customer accounts, 7 of which were also excessively traded.
When recommending a particular investment (or investment strategy) a broker has a duty to, among other things, ensure that the recommendation is suitable, by taking into account a host of factors including a customer’s investment objectives, financial and liquidity needs, as well as risk tolerance. When brokers fail to adhere to their obligations under FINRA Rule 2111, they may be held liable for investment losses sustained. Moreover, a brokerage firm has an affirmative duty to ensure that their brokers are properly supervised, and in instances when a broker engages in any misconduct or negligence, the brokerage firm may well be held liable for any losses suffered.
The attorneys at Giarrusso Law Group LLC have extensive experience in working closely with investors who have been victimized by securities fraud or related misconduct. Investors may pursue a claim to recover monies through securities arbitration before FINRA, or in some cases, 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 and confidential consultation to learn more about their legal rights.