FINRA Expels Reid & Rudiger, Bans Co-Founders Over $2.7 Million in Client Trading Losses
Updated
Updated · Investment Executive · Jun 17
FINRA Expels Reid & Rudiger, Bans Co-Founders Over $2.7 Million in Client Trading Losses
3 articles · Updated · Investment Executive · Jun 17
Summary
At least 20 client accounts were excessively traded over nearly six years, prompting FINRA to expel Reid & Rudiger and bar co-founders Edward Rudiger Jr. and Clifford Reid.
FINRA said the pair pushed a high-volume market-timing strategy that generated $2 million in commissions and other costs while causing about $2.7 million in trading losses, making profits virtually impossible for customers.
The regulator cited annualized turnover rates of 6.92 to 17.33 and cost-to-equity ratios of 34.9% to 111.6%, levels it said breached Regulation Best Interest and other FINRA rules.
Marc Harrison and chief compliance officer Kelli Mezzatesta were suspended for three months, fined $5,000 each and ordered to complete 20 hours of supervision training for failing to act on red flags.
All respondents settled the case without admitting or denying FINRA's findings, which also said the firm and Rudiger lacked a supervisory system to detect and prevent churning.