(FINRA Case #2015046971701)
Street Capital, LP f/k/a Meyers Associates, L.P (CRD #34171, New York, New York), Nas Adel Allan (CRD #4562149, Staten Island, New York) and Gregory J. Anastos (CRD #5800831, Jersey City, New Jersey) – The firm, Allan, and Anastos were named respondents in a FINRA complaint alleging that Allan and Anastos enriched themselves at the expense of elderly husband-and-wife customers at the firm.
The complaint alleges that Allan and Anastos did so by repeatedly recommending, over a 16-month period, that the customers’ trust account engage in short-term trading of a single security that they had held for more than 36 years, resulting in significant losses and capital gains tax liability for the customers, and generating over $98,000 in commissions, markups and markdowns for Allan, Anastos and the firm.
Allan’s recommendations were unsuitable for the trust in light of the investment profile of the trust and the customers, lacked an economic rationale, and resulted in unwarranted losses and tax liabilities for them. Allan’s short-term trading recommendations were advantageous for him, as Allan charged $22,474 in commissions.
After Allan left the firm, Anastos became the broker for the trust account. Anastos exercised control over the trust account and continued to recommend short-term, in-and-out trading of large positions of the same single security, as well as making recommendations for purchasing and selling call options and at times using margin in the trust account.
Anastos recommended a total of 26 transactions (24 of which involved the same single security or options relating to it), which resulted in over $69,622 in losses to the elderly customers and more than $76,000 in commissions, markups and markdowns. Anastos’s trading in the trust account was excessive, as evidenced by the high turnover rates and high commission-to-equity and cost-to-equity ratios, and it was inconsistent with the investment profile of the trust and the customers.
Anastos did not have reasonable grounds or reasonable basis for believing that the recommended transactions were suitable for the trust in light of the customers’ investment objectives, risk tolerance and financial situation.
The complaint further alleges that Anastos exercised discretionary power in the trust account without written authority and without the firm’s acceptance of the trust account as a discretionary account. Anastos effected many of the transactions in the trust account without speaking to either of the customers prior to the transactions on the dates of the transactions.
In addition, the complaint alleges that the firm failed to establish, maintain and enforce a supervisory system, including WSPs (Written Supervisory Procedures), reasonably designed to achieve compliance with FINRA’s suitability rules. The procedures did not include steps, procedures or criteria to detect and deter excessive trading and churning, and did not identify the frequency of review, parameters by which accounts were to be selected for review, nature of the review, and the manner in which such reviews were to be documented.
Moreover, the complaint alleges that the firm failed to reasonably supervise Allan and Anastos in their handling of the trust account, and ignored red flag warnings of potential unsuitable and excessive trading in the trust account. The firm failed to investigate and act upon red flags of unsuitable trading in the trust account when the account appeared on seven monthly active account reports received by the firm that indicated the account exceeded monthly thresholds for the amount of commissions charged, commission-to-equity ratio and/or losses. The firm also failed to identify and respond to red flags that should have been apparent from daily reviews of account activity.
If you feel you have been misled by Allan, Anastos, Windsor Street Capital or Meyers Associates L.P. or any Broker or Brokerage Firm and wish to discuss legal action, please contact Darren Blum at 1-877-786-2552 (1-877-STOCK LAW), www.stockattorneys.com for a free consultation.