Mack Leon Miller (also known as Mark Miller) of New York New York a stockbroker registered with Spartan Capital Securities LLC has been suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he effected excessive trades or churned a customer’s account causing the customer to incur unwarranted losses. Letter of Acceptance Waiver and Consent No. 2018057302701 (Apr. 9, 2020).
According to the AWC, during the times that Miller was associated with Dawson James Associates and Spartan Capital, he effected unsuitable trades in a seventy-nine-year-old retiree’s account. The elderly customer lacked investment experience and turned to Miller for purposes of making recommendations.
The AWC stated that the customer’s account had been actively traded by Miller which generated a high cost-to-equity ratio and high turnover rate. Stocks had been purchased and sold in the customer’s Dawson James account by Miller on a short-term basis. Between August of 2016 and March of 2017, the customer’s Dawson James account contained an annual cost-to-equity ratio of thirty-one percent and a turnover rate of nearly ten. The AWC stated that between May of 2017 and February of 2018, the customer’s Spartan Capital account was actively traded which caused the customer to have an annual cost-to-equity ratio of one hundred eighty-five percent and a turnover rate of forty.
Many courts and commentators, find an annual turn-over rate in excess of 6 to be prima facie evidence of churning. Follansbee v. Davis, Skaggs, Inc., 681 F.2d 673 (9th Cir. 1982); Seigel v. Tucker, Anthony & R.L. Day, Inc., 658 F. Supp. 550, 554 (S.D.N.Y.); See also, Note, Churning by Securities Dealers, 80 Harv. L. Rev. 869 (1967); Bowley v. Stotler & Co., 751 F.2d 641, 646 (3rd Cir. 1985).
FINRA indicated that the costs and commissions associated with Miller’s trading made it nearly impossible for the customer to avoid incurring investment losses. The elderly customer incurred $69,633.00 in losses because of Miller’s unsuitable trading. Miller’s conduct was violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure reveals that Miller is the subject of a customer initiated investment related written complaint which was settled for $7,500.00 in damages based upon allegations of inappropriate stock trades and churning of the customer’s investment portfolio by Miller during the time that he was associated with Coastal Equities Inc. On May 18, 2017, another customer filed an investment related complaint involving Miller’s conduct where the customer sought $20,000.00 in damages founded on accusations that trades were effected in the Dawson James customer’s account on an excessive basis and that misrepresentations had been made by Miller concerning his stock trading.
Miller’s registration with Dawson James Securities was terminated on April 20, 2017 based upon allegations of his unauthorized solicitation of an investor. The stockbroker has been registered with Spartan Capital Securities since April 27, 2017. Miller has been associated with at least six different securities broker dealers who have been expelled by regulators for violation of federal securities laws or who are otherwise defunct.
