According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Kane is currently the subject of a pending customer dispute. The allegations include unsuitable investment recommendations, excessive trading and misrepresentation and omission of material facts, per FINRA. According to the disclosures on Mr. Kane’s BrokerCheck, the customer is requesting $1.1 million in damages.
Excessive trading, also known as churning in the industry, can be disastrous for a portfolio. When a broker trades an account excessively, large amounts of commissions and fees may be generated, if the account is commission based (as opposed to fee based). Churning is a classic example of a broker putting his or her own monetary gain above the best interests of his or her customer.
A good indicator of a churned account is the cost-to-equity ratio, which tells you what percentage of the account’s value is eaten away by fees and commissions each year. Churned accounts may range upwards of 9%, 15%, 20%, or even higher. Another good indicator is the amount of short-term trades conducted in the account. If a customer’s brokerage statements are unusually long and the customer’s tax returns have a lot of short-term gains and losses, these may be tangible signs of churning.
This is Mr. Kane’s first customer complaint alleging excessive trading, out of four customer complaints in total, per FINRA.
FINRA records indicate that in 1999, a customer alleged inappropriate fees charged to her account.
In 2000, a customer alleged that Mr. Kane purchased volatile stocks for her on margin even though she was a conservative investor, according to his BrokerCheck report.
In 2002, a customer alleged that her portfolio was inappropriate for her, according to FINRA.
The attorneys at Malecki Law are regularly contacted by and regularly represent individuals who have lost money in connection with inappropriate securities transactions and outside business activities of financial advisors/stockbrokers. We have handled numerous cases involving churning, unsuitable investment recommendations and other types of broker misconduct.