Finra arbitrators order expelled brokerage to pay $3.2M for excessive trading

investmentnews.com:

James Fayssoux Sr. is still working at 75 rather than enjoying retirement because he lost a substantial amount of money when a brokerage firm churned his portfolio.

Fayssoux, a real estate lawyer in Greenville, South Carolina, may be on his way to financial recovery following a decision last week by Finra arbitrators, who held SW (Salomon Whitney) Financial liable for excessive, unsuitable and unauthorized trading of stock on margin in his accounts.

The unanimous three-person Financial Industry Regulatory Authority Inc. panel ordered the firm to pay $3.2 million, according to the Aug. 30 award. The total recovery is made up of $1.4 million in compensatory damages, $500,000 in punitive damages, $975,171 in returned commissions and fees, $297,208 in attorneys’ fees, $7602 in costs and $400 in arbitration fees.

In his statement of claim filed on May 31, 2022, Fayssoux said the SW Financial registered representative with whom he worked, Peter Girgis, engaged in churning in high-risk stocks. Fayssoux alleged Girgis failed to do reasonable due diligence on the unsuitable investments and did not disclose the risks of the stocks or the strategy.

Between December 2019 and April 2022, Fayssoux claims he incurred trading losses of $1.06 million and commissions and other fees of $975,171, and paid margin interest of $213,659. Fayssoux’s account had an annual turnover rate of more than 21, said his attorney, Kalju Nekvasil. There’s a presumption of fraud with a turnover rate of 4 or higher.

“It’s the most extreme churning I’ve seen in more than 40 years of practicing law,” said Nekvasil, owner of the law firm Goodman & Nekvasil.

Girgis was based in New York City and first contacted Fayssoux through a cold call. The experience has