Bahram Mirhashemi, of Irvine, California, a stockbroker registered with Accelerated Capital Group, Inc., was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he had engaged in unauthorized and excessive trading, churning, and unsuitable recommendations. Letter of Acceptance, Waiver and Consent, No. 2012033566201 (Feb. 25, 2016).
According to the AWC, from August 31, 2012 through January 28, 2015, Mirhashemi, while acting in the capacity of stockbroker for his firm, engaged in unsuitable trading, excessive trading, and churning in several of his customers’ accounts. The AWC indicated that he effected in excess of two thousand trades in nine customers’ accounts, notwithstanding seldom gaining the customers’ approval prior to doing so. Mirhashemi reportedly failed to gain approval from customers on the day in which trades were effected. FINRA found that Mirhashemi violated FINRA Rule 2010 as a result of his unauthorized trades.
The AWC indicated that Mirhashemi incorporated an investment strategy with eleven unsophisticated and elderly investors which involved trading of short-term mutual funds. The AWC stated that the customers always consented to the strategies recommended by Mirhashemi. The customers, many of whom were widowed and in their eighties, relied upon a fixed income and had risk tolerances that did not exceed the conservative-moderate level.
Mirhashemi reportedly purchased, on behalf of the aforementioned customers, over one-hundred and fifty shares of mutual funds which carried commissions on the front end (class A shares), where he would sell such shares after customers’ only held them for a few months. The AWC indicated that customers had investment horizons of approximately five years and intended on holding investments for at least one year. Mirhashemi reportedly engaged in a tactic to prevent customers from obtaining breakpoint discounts on fund purchases via allocating the purchases among many funds. The AWC stated that Mirhashemi raked in at least $150,000.00 in commissions in the aggregate from eleven customers. FINRA considered Mirhashemi’s investment strategy in this regard to be unsuitable and excessive.
The AWC indicated that from 2013 through 2014, Mirhashemi engaged in thousands of swing trades in eleven customers’ accounts, where Mirhashemi would purchase securities, only to sell such securities days later without any emphasis on his customers’ interests. The AWC stated that Mirhashemi’s swing trade strategy, which carried substantial risks of losses to customers and high commissions in the process, actually caused investors to lose $770,000.00 in the aggregate.
The AWC stated Mirhashemi’s strategy caused customers to have inordinately high turnover rates and cost/equity ratios, such that his strategy was deemed by FINRA as churning. The AWC indicated that Mirhashemi earned $650,000.00 in commissions from the eleven customers by employing his swing trade strategy. FINRA found that Mirhashemi’s aforementioned churning, resulting from unsuitable and excessive trading, constituted willful violations of Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, as well as FINRA Rules 2010, 2111, and 2020.
The AWC stated that after Mirhashemi’s firm suspended his trading privileges and removed him as the stockbroker on the customers’ accounts in January 2015, Mirhashemi sent communications to thirty-seven of his customers to transfer funds from his firm into another investment advisory so that Mirhashemi could continue to act as the customers’ advisors.
Mirhashemi reportedly disguised his motive for urging customers to move their funds to the investment advisory by claiming that he could offer customers’ more investment opportunities and different fee arrangements. Mirhashemi artfully omitted to customers that he was actually suspended from Accelerated and prohibited from acting as their stockbroker. FINRA found that Mirhashemi violated FINRA Rules 2210 and 2010 as a result of his misleading communications with the thirty-seven customers.
Public disclosure records reveal that Mirhashemi has been subject to fifteen disclosure incidents. On August 27, 2012, Mirhashemi’s former employer, Ameriprise Financial Services, Inc. terminated Mirhashemi amid allegations of violating Ameriprise’s suitability policies pertaining to fixed income investment strategies.
On April 17, 2013, Mirhashemi settled a customer dispute for $135,495.27 amid allegations by the client of poor performance caused by Mirhashemi’s stockbroker activities. On July 27, 2015 and December 2, 2015, Mirhashemi became subject to pending customer disputes, where customers are claiming that Mirhashemi engaged in unauthorized and excessive trading.
On December 31, 2015, Mirhashemi became subject to another pending customer dispute, in which a customer is claiming $160,000.00 in damages due to material omissions and misrepresentations, breach of fiduciary duty, excessive trading, and elder abuse. Mirhashemi became subject to yet another pending customer dispute on January 7, 2016, in which Mirhashemi is alleged to have engaged in unauthorized trading.
On January 8, 2016, Accelerated Capital Group, Inc. terminated Mirhashemi amid notification by FINRA concerning Mirhashemi’s aforementioned misconduct discussed in Mirhashemi’s February 26, 2016 disciplinary action. On February 4, 2016, prior to Mirhashemi’s permanent bar, Mirhashemi was suspended for failing to comply with a settlement agreement and failing to correspond with FINRA regarding his status of compliance.
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