(FINRA Case #2015046971701)
Nas Adel Allan (CRD #4562149, Staten Island, New York) – An Offer of Settlement was issued in which Allan was fined $2,500, suspended from association with any FINRA member in all capacities for one month and ordered to pay disgorgement of a portion of commissions received in the amount of $2,500, plus interest.
Without admitting or denying the allegations, Allan consented to the sanctions and to the entry of findings that he recommended, over an approximate two month period, that elderly husband and wife customers engage in short-term trading of a single security that they had held for over 36 years, resulting in losses and capital gains tax liability for the customers and generating over $22,000 in commissions, markups and markdowns for Allan.
The findings stated that Allan first recommended to the customers that their trust liquidate its position in the stock, worth approximately $191,000 at the time of sale. Approximately one week later, Allan recommended that the trust repurchase a large position in the stock. Allan again recommended that the trust sell all of its shares at a price lower than it had paid to repurchase those shares. Nearly two weeks after incurring this loss, Allan again recommended that the trust repurchase those shares — again at a higher price than what the trust had recently sold those shares.
Allan’s recommendations were unsuitable in light of the customers’ investment profile, lacked an economic rationale and resulted in unwarranted losses and tax liabilities for the customers. Allan charged more than $22,000 in markups and markdowns on just four transactions.
The findings also stated that Allan’s recommendations failed to take into account the tax status of the customers and the trust. Specifically, the sale of the shares resulted in an approximate $15,000 capital gains tax liability for the customers because they held the shares at a very low basis, compared to its then-current value.
There was no economic rationale for Allan to engage in short-term trading of the shares, thereby exposing his customers to a large capital gains tax liability, while Allan charged commissions that wiped out any gains that could have resulted from the round-trip transactions.
The suspension was in effect from June 4, 2018, through July 3, 2018.
Since 2002 Allan has worked for 14 different firms and some firms twice at different time periods. Of those 14 firms four had been expelled by FINRA. Until his recent position at Merrill Lynch, Pierce, Fenner & Smith Incorporated he hadn’t work for any firm longer than one year.
If you feel you have been misled regarding investing 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.