Los Angeles Broker, Dan Maughan, named Respondent in FINRA Complaint for Excessive Trading and Churning Account through $70 Million in SalesMonday, August 26, 2019
On August 14, 2019, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement filed a complaint against Daniel Maughan, a former registered representative associated with Financial West Group in Los Angeles, California, for allegations of churning and excessively trading a customer’s trust account.
FINRA alleges in the AWC that from October 2010 to January 2015, Maughan made approximately 1,648 trades totaling $70 million in sales and value of purchases in a customer’s trust account. Maughan frequently purchased long equity call options, such as Chicago Bridge & Iron Company and NQ Mobile, in the trust account, with most positions expiring as worthless or sold at a loss. The annualized cost-to-equity ratio for the trust account was 21.06, making the trades quantitatively unsuitable for the customer while generating approximately $841,000 in commissions and trade costs. Maughan also recommended qualitatively unsuitable trades in the trust account involving options and non-traditional Exchange-Traded Funds (ETFs) and an Exchange Traded Note (ETN).
Due to Maughan’s excessive trading, the account incurred realized and unrealized losses of approximately $812,000. By churning the account, FINRA asserts that Maughan willfully violated Section 10(b) of the Securities Exchange Act of 1934 and FINRA Rules 2020 and 2010. By excessively trading the account, Maughan violated FINRA Rule 2111 and 2010.
Based on the foregoing, Dan Maughan violated Section 10(b) of the Securities and Exchange Act of 1934, NASD Rule 2310 and FINRA Rules 2111, 2020 2360(b)(19)(A) and (B) and 2010. FINRA Department of Enforcement is requesting relief to make findings of fact and conclusions of law that Daniel Maughan committed the violations alleged in the complaint and order that sanctions and fines be imposed under FINRA Rule 8310(a) and 8330.
Oftentimes brokerage firms can be held liable for the brokers’ misconduct if they failed to supervise them while registered at the firm. If you lost money due to Daniel Maughan’s investment advice, you may be able to recover from him or Financial West Group, the brokerage firm where he was registered. Since 1998, the experienced attorneys at ChapmanAlbin LLC have been fighting for victims of investment fraud and broker misconduct. Call us today at 1-877-410-8172 for a free consultation.