Janet Lynn Ross, of Irvine, California, chief compliance officer of Accelerated Capital Group, Inc., has been fined $10,000.00 and suspended for two years from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that Ross, inter alia, failed to supervise stockbrokers who made unsuitable, excessive and unauthorized transactions in customer accounts. Letter of Acceptance, Waiver and Consent, No. 2012033566203 (Dec. 13, 2017).
According to the AWC, Ross failed to supervise BM – a stockbroker who effected class A share mutual fund transactions in eleven customer accounts that were excessive and unsuitable for customers. Apparently, between 2012 and 2014, at least one-hundred and fifty class A mutual fund purchases had been effected by Ross, where he then sold those holdings after six months on average. BM reportedly effected purchases in multiple fund families, precluding customers from benefiting from breakpoint discounts.
Evidently, BM’s transactions were inadequately reviewed by Ross. For example, in situations where she detected that mutual fund transactions were potentially excessive, she questioned BM but simply accepted the explanations provided by BM rather than engaging in further analysis of his activities. The AWC stated that Ross would have caught onto BM’s activities if she communicated with customers because she would have discovered that transactions in nine customers’ accounts were not authorized.
The AWC revealed that BM shifted his short-term trading strategy to an equity swing trading strategy after he was placed on a heightened review. Evidently, between 2013 and 2014, thousands of swing trades had been entered in accounts of eleven customers, causing customers to sustain $700,000.00 in losses. Ross reportedly failed to identify BM’s activities for nearly a year, and failed to contact those customers to discover the unauthorized trading in nine customer accounts.
Ross also failed to supervise JLS, who effected three hundred sell orders in twenty-five customer accounts on August 25, 2015, even though customers never consented to the transactions. JLS reportedly liquidated customers’ mutual fund holdings out of concern for a market correction. The AWC stated that Ross did not identify that JLS engaged in abnormal activity upon reviewing the trade blotter provided by the firm; she only discovered JLS’ activities after a complaint surfaced about sales of mutual fund holdings. As was the case with BM, Ross evidently relied upon JLS’ explanations for his trading activities in customer accounts instead of further investigating his activities.
The AWC additionally referenced that Ross failed to supervise registered representatives that utilized altered and pre-signed customer forms, and failed to accurately report customer complaints stemming from JLS’s and BM’s activities. FINRA found that Ross’ conduct was violative of FINRA Rules 2010, 3110(a), 4530, and NASD Rules 3010(a) and 3010(e)
FINRA Public Disclosure reveals that Ross has been identified in three customer initiated investment related disputes in regard to accusations of Ross’ misconduct during the time she was registered with Accelerated Capital Group, Inc. Specifically, a customer initiated investment related arbitration claim concerning Ross’ conduct was settled for $165,000.00 in damages founded on allegations of excessive and unauthorized equity trading. FINRA Arbitration No. 15-03471 (Feb. 1, 2016).
Subsequently, a customer initiated investment related arbitration claim involving Ross’ activities was settled for $110,000.00 in damages based upon allegations of negligent supervision and breach of fiduciary duty. FINRA Arbitration No. 16-01433 (May 8, 2017). Further, a customer initiated investment related written complaint regarding Ross’ conduct was resolved for $190,000.00 in damages supported by accusations of breach of contract, breach of fiduciary duty, excessive trading and fraud relating to stock trades placed in the customer’s account between 2009 and 2015. FINRA Arbitration No. 16-021262 (Sept. 6, 2017).
Ross was fired from Accelerated Capital Group, Inc. on February 24, 2017, based upon allegations that she failed to abide by the firm’s policies in reference to her chief compliance officer role.
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