Former Windsor Capital broker, Jovannie Aquino has been barred from working in the industry by the Securities and Exchange Commission after allegedly churning his retail customers’ accounts. The SEC further alleged that Mr. Aquino executed trades in client’s accounts during his time as a registered representative at Windsor Capital between May 2014 and November 2017. While at least seven customers incurred at least $881,000 in losses, Mr. Aquino generated $935,000 in profits, according to the SEC. A recent administrative proceeding order issued by the SEC reveals that Mr. Aquino consented to a final judgment enjoining him from future violations. Our securities attorneys have investigated into the SEC’s findings on Jovannie and many other brokers accused of engaging in fraud involving churning claims.
According to the SEC’s complaint, Mr. Aquino allegedly gained control of these customer accounts through cold-calls using publicly-available databases. Once Mr. Aquino held these seven customer accounts, he reportedly recommended a series of frequent, short term-trades. Even though the customer accounts were non-discretionary, Mr. Aquino allegedly made trades without their explicit permission. Allegedly, Mr. Aquino profited through excessive markups/markdowns, commissions, and other fees from churning these accounts.
Churning is when a broker frequently trades in a customer’s account to profit from the commissions. Although there is no exact formula to demonstrate churning, the securities industry informally considers turnover rates and cost-to-equity ratios to be indicative of this behavior. The average turnover rate, defined as the percentage of securities replaced in a given year was 28.9 for these customer accounts. Such a number is well above the minimum of 6, that usually suggests excessive trading. Additionally, the average annualized cost-to-equity, the break-even ratio for Mr. Aquino’s seven customer accounts was 87%. Based on that metric, the customers’ portfolio values would have to increase by at least 87% on average to see any profits.
As a FINRA-registered broker, Mr. Aquino must reasonably believe that the transaction or investment strategy is considered suitable for the customer under FINRA rule 2111. An investment’s “suitability” is based off a customer’s investment profile, which includes their age, financial needs, objectives, risk tolerance, and other revealing factors. Mr. Aquino’s alleged high cost, frequent trading strategy was inconsistent with his customer’s profile, let alone anyone for that matter. The trades certainly did not align with Mr. Aquino’s promises to employ a “profitable trading strategy”, as mentioned in the SEC complaint. Unfortunately, Mr. Aquino’s customers would not have much of a chance of actually profiting from their investment portfolio held with Windsor Capital.
Besides these allegations, Mr. Aquino’s publicly available records show many red flags that customers should look out for when selecting a broker to handle their accounts. According to BrokerCheck, Jovannie Aquino (CRD # 4876661) worked for 12 different brokerage firms within his 11 years of experience in this industry. Besides Windsor Capital, Mr. Aquino was a FINRA-registered representative for Spartan Capital Securities (2017-2018), John Carris Investments (2014), National Securities Corporation (2010-2011), Rockwell Global Capital (2011), John Thomas Financial (2011-2012), J.P. Turner & Company (2008-2010), Bank of America (2006-2007), VFinance Investments (2006), Avalon Partners (2006, 2004-2005), and Gunnallen Financial (2005). In total, Aquino’s BrokerCheck records list 8 disclosures, including 4 customer disputes. In 2011, Rockwell Global Capital terminated Mr. Aquino for entering a complex commission agreement without the firm’s permission.
Former clients of Jovannie Aquino or any other FINRA-registered broker firm who have lost money should find an experienced securities lawyer. Our highly rated securities fraud attorneys in New York City have helped investors cover millions for claims related to churning, unsuitability and other fraud in FINRA arbitrations. For more information about your rights to seek justice, call our investment fraud team for a free consultation.