(FINRA Case #2015048048801)
Hank Mark Werner (CRD #1615495, Northport, New York) – An OHO (Office of Hearing Officers) decision became final in which Werner was fined $80,000; barred from association with any FINRA member in all capacities; ordered to pay $155,393.61, plus prejudgment interest, in restitution to a customer; and ordered to disgorge $10,030, plus prejudgment interest.
The sanctions were based on findings that Werner willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Exchange 28 Disciplinary and Other FINRA Actions February 2018 Act Rule 10b-5, and violated FINRA Rule 2020 by churning and excessively trading three accounts belonging to a customer who was elderly, blind and in poor health.
The findings stated that Werner’s trading caused the customer to lose more than $175,000. Werner knew that his trading was costing the customer a large amount of money, yet he persisted in excessively trading her accounts and charging her unreasonable commissions. Within three years, even after taking into account the customer’s withdrawals, Werner depleted the customer’s two Individual Retirement Accounts (IRA). This led Werner to have the customer open a third brokerage account funded with a variable annuity withdrawal so that he could continue to trade. The $210,586 in commissions Werner received over three years was an important source of income that helped him pay his substantial tax liabilities and living expenses.
The level of trading Werner engaged in, combined with the inappropriate commissions he charged, made it unreasonable for him to expect that he could earn a profit in the customer’s accounts, as he claimed. Werner engaged in aggressive, in-and-out trading—repeatedly purchasing securities and then selling them after relatively short holding periods to purchase other securities—for no apparent reason. Such in-and-out trading is a hallmark of excessive trading and churning.
The findings also stated that Werner made an unsuitable recommendation that the customer surrender an existing variable annuity to purchase another, without having a reasonable basis to believe that the transaction was suitable. In this case, replacing the variable annuity with another caused the customer to incur additional expenses and fees and a new surrender period. The new product offered her no features that were better than the variable annuity that she owned.
If you are an investor that lost money Hank Mark Werner or any broker you should consider all legal options. If you wish to discuss your particular situation and the potential for the recovery of your investment losses, please contact Darren Blum at 1-877-786-2552 (1-877-STOCK LAW), www.stockattorneys.com for a FREE EVALUATION of your potential case.