Joseph Leigh Cotter, of Charlotte, North Carolina, a stockbroker with Next Financial Group, Inc., has been fined $15,000.00, disgorged of $100,549.42 in commissions, and suspended for nine months from having any association with a FINRA member by consenting to findings that he effected transactions in an investor’s accounts on an unsuitable and excessive basis. Letter of Acceptance, Waiver and Consent, No. 2016049316301 (Oct. 17, 2017).
According to the AWC, from January of 2014 to December of 2015, Cotter exercised authority over two accounts belonging to LC – an investor in her sixties. All transactions that were effected in the customer’s account during this period were reportedly solicited by Cotter and approved of by the customer; the customer lacked investment expertise and relied upon him to make decisions. Apparently, however, Cotter traded in the customer’s account excessively, which conflicted with LC’s objectives for investing, needs and financial circumstances.
Evidently, Cotter’s trading led customer LC’s individual retirement account to suffer from a 23.2 percent cost-to-equity ratio and 9.84 turnover rate. The customer’s second account evidently suffered from a 20.2 percent cost-to-equity ratio and 5.3 turnover rate. As a result, Cotter generated $100,549.42 from the customer, while LC sustained $391,893.00 in investment losses. FINRA concluded that Cotter’s transactions were not suitable for customer LC considering her conservative tolerance for risk, age, and the fact that she would need to generate over twenty-percent returns to break even. Cotter’s conduct was found by FINRA to be violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure reveals that on January 23, 2017, a customer initiated investment related complaint regarding Cotter’s activities was settled for $328,646.00 in damages based upon allegations that he mishandled the customer’s brokerage accounts relating to common stock and corporate debt transactions effected in the customer’s account between 2013 and 2016. Cotter has also been identified in a customer dispute which was resolved for $20,000.00 in damages, supported by allegations of inappropriate options and stock trades having been effected in a customer’s account.
Cotter was fired by Next Financial on March 18, 2016, based on allegations of excessively trading in a customer’s account. He was later employed by Petersen Investments, Inc. from March 24, 2016, to May 10, 2017, during which time his employment ended in anticipation of a FINRA regulatory action against him.
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