James William Flower (also known as Jim Flower) of Garden City New York a stockbroker formerly registered with SW Financial has been issued a Financial Industry Regulatory Authority (FINRA) Extended Hearing Panel Decision on May 27, 2021 in which he has been barred from associating with any FINRA member in any capacity based on findings of him churning and making unauthorized trades in customer accounts, and mismarketing order tickets. Department of Enforcement v. James W. Flower Disciplinary Proceeding No. 2017052701101 (May 27, 2021).
According to the Extended Hearing Panel Decision, Flower caused customers’ accounts to have annual turnover rates that ranged between 16 and 33. The regulator indicated that the accounts contained cost-to-equity ratios that ranged between 69 percent and 176 percent. Customers were only able to break even through making a large return which never came. The customers’ cost-to-equity ratios made it nearly certain that losses would be sustained.
FINRA also reported that Flower made in-and-out trades. The same security had been bought and sold in days which showed excessive trading. Flower caused customers to incur large costs in reference to his trading. The regulator indicated that Flower used margin in some cases which increased costs further and enabled him to make more in commissions.
According to the Decision, customers were told what to invest in by Flower, and customers did what he recommended. The Decision stated that customers lacked experience with active trading. They were not apprised on how the stockbroker was paid or how his frequent trading impacted costs. Flower downplayed warnings that SW Financial provided to customers regarding how frequent trading would affect their returns.
The stockbroker caused customers to incur $223,000 in damages. The commissions which Flower charged during this period amounted to $185,000. Flower personally took in 70 percent of the commissions from customers.
The Decision also reported that a different customer did not provide Flower with authorization for his trading. 17 unauthorized trades were made by the stockbroker. That customer sustained at least $30,000.00 in market losses as a result.
The Decision also found that Flower mismarked customers’ orders. 58 sales were misrepresented as being unsolicited transactions. The stockbroker solicited those transactions according to the regulator. Sales which were mismarked caused losses. FINRA’s Extended Hearing Panel found that Flower churned and excessively traded, violating Securities Exchange Act of 1934 Section 10(b) and Securities and Exchange Commission (SEC) Rule 10b-5, and FINRA Rules 2020.
Flower has been identified in four customer initiated investment related disputes concerning accusations of his harmful conduct when registered with JP Turner Company, Global Arena Capital Corp and Laidlaw Company. FINRA Public Disclosure confirms that a customer filed an investment related complaint pertaining to Flower’s conduct where the customer sought $21,000.00 in damages based upon allegations of his failure to follow a customer’s stop loss order in regard to over-the-counter equities at JP Turner Company.
Flower is referenced in another customer initiated investment related FINRA securities arbitration claim which was resolved for $67,500.00 in damages founded on accusations that Flower made misrepresentations to the customer regarding exchange traded funds. The claim also alleges that a stop loss order was not processed.
Flower is the subject of a different customer initiated investment related written complaint in which the customer requested $250,000.00 in damages supported by allegations that the customer’s account had been churned and that margin was excessively used by the stockbroker. According to the claim, the customer’s account was churned and had been overconcentrated in over-the-counter equities and stocks. The claim also alleges that Flower’s unsuitable trading caused the customer to experience damages.
Another customer initiated investment related complaint involving Flower’s conduct was settled for $45,000.00 in damages based upon accusations of suitability and churning at Laidlaw Company.
Flower was registered with SW Financial between December 1, 2015 and June 3, 2019. He has been associated with Spartan Capital Securities LLC since June 13, 2019.