David Weisberg of New York New York a stockbroker formerly registered with Worden Capital Management LLC has been fined $7,500.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he effected unsuitable and excessive trades in the account of a Worden Capital Management customer. Letter of Acceptance Waiver and Consent No. 2019063442701 (Apr. 22, 2020).
According to the AWC, in December of 2016, a seventy-three year-old customer who planned to invest for five years had placed about $26,000.00 into a Worden Capital Management margin account after being solicited by Weisberg. The AWC stated that stock trades had been solicited by Weisberg immediately after the customer established the account. Some of the trades that Weisberg recommended involved in-and-out trades which caused the customer to be exposed to higher costs.
The AWC stated that in one case, the customer was advised on May 15, 2017 to purchase specific shares of stock. On May 16, 2017, Weisberg pushed the customer to sell those shares. On May 17, 2017, the customer was advised to purchase the shares again. FINRA stated that between December of 2016 to June of 2018, 152 trades had been recommended by Weisberg. Margin was utilized for most of those transactions.
The AWC stated that the customer relied upon Weisberg’s advice and in almost every case followed the recommendations made by the stockbroker. There were no purchases during the period FINRA evaluated in which the customer proactively approached Weisberg to make purchases or sales of securities.
FINRA stated that the customer’s account had an annual cost-to-equity ratio of more than 169 percent because of the trades that Weisberg effected between December of 2016 and June of 2018. This meant that the customer would have needed for the investments to rise 169 percent in value for the customer to avoid taking a loss. Weisberg caused the customer to incur $55,627.00 in losses while he generated $75,638.00 in commissions from the customer.
FINRA determined that Weisberg disregarded the costs associated with his trading when he made recommendations to the customer. The stockbroker’s trading was found by FINRA to be quantitatively unsuitable in violation of FINRA Rules 2010 and 2111.
The AWC also revealed that Weisberg effected trades in two customers’ accounts without generating pre-trade confirmation from customers. The stockbroker did not have any authorization from those customers to effect trades on a discretionary basis. His exercise of discretion was not approved by Worden Capital Management either. FINRA determined that twenty-one stock trades were executed by Weisberg without authorization in violation of FINRA Rules 2010 and NASD Rule 2510(b).
FINRA Public Disclosure reveals that Weisberg has been identified in four customer initiated investment related disputes containing allegations of his misconduct while employed with Legend Securities Inc. and Worden Capital Management. Specifically, a customer filed an investment related complaint involving Weisberg’s conduct in which the customer requested $17,000.00 in damages based upon allegations that the customer’s account was churned and that unauthorized stock transactions were effected by Weisberg during the period in which he was associated with Worden Capital Management.
Another customer filed an investment related arbitration claim involving Weisberg’s conduct in which the customer requested $21,579.00 in damages based upon allegations that Weisberg’s negligence with regard to stock and over-the-counter equities trades had caused the customer to incur losses. FINRA Arbitration No. 19-01580. The claim alleges that misrepresentations and omissions had been made by the stockbroker and that contractual and fiduciary obligations had been violated. According to the claim, stock trades failed to be suitable for the Worden Capital Management customer.
Weisberg’s registration with Worden Capital Management has been terminated as of July 22, 2019. He has been associated with at least two different securities broker dealers which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct.