FINRA fined and suspended former JP Morgan Securities Managing Director Trevor Bradner Rahn of the firm's Los Angeles, CA branch for unauthorized use of discretion, executing hundreds if not thousands of unauthorized trades, and mismarking solicited orders as unsolicited.
According to AWC #2018059251701, Trevor Rahn (CRD #2196155) exercised discretionary power in 32 accounts without authorization in order to implement an "average pricing" strategy to break up 1,106 orders into 7,500 smaller trades. FINRA further found that Rahn lacked a reasonable basis to believe this "average pricing" investment strategy was suitable for at least some investors, not to mention Rahn's actual clientele, and that Rahn failed to conduct reasonable due diligence to understand the cost implications of this investment strategy.
Rahn also allegedly executed 577 trades in a customer's account without that investor's authorization and mismarked 4,714 solicited trades in several customer accounts as "unsolicited," which caused JP Morgan to maintain inaccurate books and records.
JP Morgan Chase Bank terminated Rahn in 2018 for "unacceptable practices" relating to order timing and size, the resulting transaction charges in a client account, and marking of certain orders as unsolicited.
A customer dispute from 2019 since settled for nearly $550,000 alleged Rahn's increased trading activity resulted in losses and significant tax obligations, specifically alleging that Rahn's "pattern of unauthorized trading and margin use in [a] customer's account in order to generate commissions" resulted in further losses.
A second settled complaint alleged over $1 million in damages resulting from unauthorized trading. Rahn's BrokerCheck also lists an additional civil judgment/lien from 2014 in the amount of $763,424.76.
As the 2019 complaint alluded to, a stockbroker may unsuitably and unethically seek to excessively trade a customer's account in order to generate commissions, sales charges, or other fees to benefit the broker or firm, instead of acting in the investor's best interest. In Rahn's case, breaking up 1,106 orders into 7,500 smaller trades may well have increased the opportunity to generate excessive commissions and fees by adding thousands of additional trades.
Finally, when a broker improperly marks solicited transactions as unsolicited, such transactions may evade proper supervision and review protocols which exist to protect customers. With the true nature of such a solicited transaction left undisclosed and masquerading as unsolicited, this cover-up may expose an investor to additional harm.
If you have invested with ex-JP Morgan broker Trevor Bradner Rahn of Southern California or with any investment adviser or registered representative who improperly and unsuitably exercised discretion without your authorization, permission, or consent in order to artificially inflate trade volume or cause you to incur additional sales charges, commissions, or fees associated with the additional transactions, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.