Sean P. McCabe, a stockbroker based in Hauppauge, New York, and registered with Network 1 Financial Securities Inc., was the subject of FINRA regulatory action (AWC No. 2019060753510) for excessive and unsuitable trading. This action involved conduct that occurred during McCabe’s previous employment with Worden Capital Management LLC in Melville, New York. FINRA alleged that between September 2015 and October 2019, McCabe engaged in high-frequency trading that caused financial harm to a customer’s account.
The customer, a farmer in his fifties with a speculative risk tolerance, incurred realized losses of $57,445, while McCabe generated $19,275 in commissions. McCabe’s recommendations frequently involved in-and-out trading, including advising the customer to sell securities shortly after purchasing them, even when there was no material change in the security’s value.
One such transaction occurred in January 2016, when McCabe recommended purchasing over $30,000.00 worth of stock in a multinational technology company, only to advise selling the position eight days later, incurring losses due to commissions. These actions led to an annualized turnover rate of 8 and a cost-to-equity ratio of approximately 36%, both indicators of excessive trading. FINRA found that these practices violated FINRA Rules 2111 and 2010, which mandate suitability and the maintenance of high standards of commercial honor.
On December 11, 2024, McCabe consented to the findings without admitting or denying the allegations and accepted sanctions as part of a Letter of Acceptance, Waiver, and Consent (AWC). The sanctions included a three-month suspension from associating with any FINRA member, effective from January 6, 2025, to April 5, 2025, along with a $5,000.00 fine and $19,275 in restitution to the affected customer, plus interest.
This regulatory action originated from a FINRA cycle examination of Worden Capital Management, where McCabe was registered with the time. The firm was subsequently expelled by FINRA in 2022 for unrelated violations. McCabe later joined Network 1 Financial Securities in March 2020, where he is still registered.
According to FINRA Public Disclosure, McCabe’s history also includes several customer initiated investment related FINRA securities arbitration claims and other disputes. In FINRA Arbitration No. 22-00347) alleged negligence, excessive trading, suitability, and breach of fiduciary duty. The claim was settled on September 28, 2022, with a $10,000.00 settlement amount. Another arbitration claim (FINRA Arbitration No. 18-03814), filed on November 8, 2018, alleged fraud, misrepresentation, and unsuitable recommendations, resulting in a $17,500.00 settlement.
Additional disputes include a claim (FINRA Arbitration No. 16-00594) alleging breach of fiduciary duty and negligence, settled on February 18, 2017, for $36,000.00. In a separate case (FINRA Arbitration No. 16-00595), similar allegations led to a $210,000.00 settlement on November 14, 2017. A further arbitration claim (FINRA Arbitration No. 15-01338) involved allegations of excessive trading, unauthorized trading, and misrepresentation, resulting in a $65,000.00 settlement, with a $5,000.00 contribution by McCabe.
Pending disputes include FINRA Arbitration No. 24-01271, filed on June 18, 2024, alleging negligence and failure to hedge or provide downside protection, and FINRA Arbitration No. 23-02209, filed on August 22, 2023, alleging unsuitability, fraud, and breach of fiduciary duty. Both cases remain unresolved, with damages estimated to exceed $5,001.00.
