FINRA charged Independent Financial Group (IFG) of Encinitas broker Stewart Taylor Ginn aka Paxton Ginn, Jr with churning and excessively trading five customer accounts from 2019-2022, resulting in $4.5 million worth of losses for Ginn's clients, several of whom were seniors and at least one of whom suffered from Alzheimer's disease. Ginn also allegedly exercised discretion without authorization to further his churning and excessive trading activities.
Investigators allege that Stewart Ginn (CRD #4503197) charged high commissions while excessively trading his customers' accounts, causing his clients to incur losses exceeding $2.2 million, while generating another $2.2 million in commissions and fees for the benefit of Ginn and IFG.
Ginn purportedly recommended his customers purchase large equities positions, which quickly became the subject of excessive trading that incurred high commission fees.
FINRA wrote in its complaint that Ginn wilfully violated securities laws, including Regulation Best Interest and its Care Obligation which states that brokers shall act in the best interests of their clients. FINRA has recently begun cracking down on Regulation Best Interest violations, which comes from the federal Securities Exchange Act.
While tracing some of Ginn's specific churning and excessive trading activity, investigators found that Ginn "frequently engaged" in excessive trades even when share prices stayed largely flat. For example, Ginn purchased 6,000 shares of a media company for one client at $25.49 per share, only to sell the entirety of the 6,000-share position two weeks later at $25.46 per share, generating $7,643 in commissions and resulting in a realized loss of $7,810 for the customer.
Another of Ginn's customers, an elderly Alzheimer's patient, passed away in 2022, having previously indicated an investment objective of "growth & income" and "moderate" risk tolerance. Despite this, Ginn allegedly made 275 trades in the customer's trust account, resulting in $570,000 in realized losses. While the customer lost over half a million dollars, Ginn and IFG reportedly received commissions of $652,000.
FINRA's complaint against Stewart Ginn comes as a trio of customers filed disputes against the IFG broker, alleging excessive commissions alongside unsuitable recommendations and trades.
As of October 2023, one of these disputes has been settled for $400,000, while two later disputes alleging damages of $120,000 and $1.4 million, respectively, remain pending.
Although Ginn holds an active registration with IFG in Encinitas, California; Santa Maria, California; and Denver, Colorado (as of October 2023), he also worked as a broker at Navian Capital Securities from 2021-2023.
If you invested with Independent Financial Group broker Stewart Taylor Ginn or with any investment adviser or representative whose unsuitable recommendations, excessive trading, churning, or excessive commissions have proven harmful to your interests through investment losses or exorbitant fees, 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.