Steven D. Ridgley, of Louisville, Kentucky, a stockbroker with Waddell & Reed, was fined $10,000.00 and suspended for two months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he engaged in unauthorized discretionary trading in customer accounts. Letter of Acceptance, Waiver and Consent, No. 2014043025703 (Mar. 23, 2016).
According to the AWC, Ridgley formed RBR Group along with two other Waddell & Reed stockbrokers, MR and CB, where the individuals collectively engaged in securities business on behalf of customers. The AWC stated that in January 2013, CB and Ridgley contacted customers quarterly and conferred with them about their investment allocations.
CB and Ridgley reportedly made broad recommendations to such investors regarding which of the financial sectors should be invested in, but had not made recommendations to investors concerning the specific securities to invest in.
The AWC stated that the RBR Group members then conferred amongst each other about the specific trades to be effected in the accounts of the customers. Following such discussions, MR reportedly effected the trades on behalf of customers; however, customers did not become apprised of the specific trades until after they occurred.
The AWC additionally stated that from January 2013 through January 2015, Ridgley had engaged in the discretionary trading of several hundred transactions in the accounts of an estimated eighty customers. FINRA found that customers had not actually provided the requisite written authorization to Ridgley prior to his trading activity. Apparently, such accounts were not approved in writing by Waddell & Reed for discretionary trading. Consequently, FINRA found that Ridgley had violated FINRA Rule 2010 and NASD Conduct Rule 2510(b), leading to his aforementioned fine and suspension.
Public disclosure records via FINRA’s BrokerCheck reveal that Ridgley has been subject to six disclosure incidents. On January 14, 2010, a customer lodged a complaint against Ridgley alleging that the customer’s variable annuity was surrendered in order to purchase mutual fund Class A shares without the customer ever being informed by Ridgley to provide consent for such transactions.
On January 27, 2015, Waddell & Reed terminated Ridgley amid allegations of violating the firm’s policies concerning unauthorized discretionary trading. On February 12, 2015, Ridgley became subject to a pending customer dispute, where a customer alleged that a closed-end fund purchase was not suitable given the customer’s risk tolerance and investment objectives; and resulted in over-concentration in the customer’s account and undue tax burdens.
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