New York General Securities Representative Consents to Sanctions Imposed by FINRA to Resolve Allegations of Excessive and Unsuitable Trading and Exercising Discretion in Customer AccountsWednesday, May 6, 2020
David Weisberg, a former general securities representative associated with Worden Capital Management, LLC (Worden), recently consented to sanctions imposed by the Financial Industry Regulatory Authority (FINRA) Department of Enforcement for allegedly engaging in excessive and unsuitable trading in an elderly customer’s account.
Weisberg has been associated with several FINRA member firms based in New York City since entering the securities industry in 2008. From January 2009 to December 2010, Weisberg was associated with John Thomas Financial, Fordham Financial Management, Inc., JHS Capital Advisors, Inc. and First Midwest Securities, Inc. at various times. Weisberg then became associated with Legends Securities, Inc. from December 2010 to October 2014 and again from November 2015 to November 2016. Weisberg was associated with Worden from November 2016 to July 2019. Worden amended Weisberg’s Form U5, on August 1, 2019, disclosing a customer complaint against him, which became the focus of a FINRA investigation. This customer complaint alleged negligence, unsuitability, breach of fiduciary duty, breach of contract, negligent misrepresentation and omissions.
A recent Letter of Acceptance, Waiver and Consent (AWC) submitted by Weisberg and approved by FINRA on April 22, 2020, alleges that Weisberg engaged in excessive and unsuitable trading in an elderly customer’s account. Weisberg allegedly cold-called the elderly customer in December 2016 and convinced him to open a margin account at Worden. The customer, who was 73 years old at the time, placed $26,000 in securities and cash in his new Worden account and had an investment horizon of one to five years.
According to the AWC, Weisberg made dozens of recommendations to buy stock with an annualized cost-to-equity ratio over 169% December 2016 to June 2018. Some of his recommendations involved speculative in-and-out trading, a strategy in which securities are bought and sold frequently over a short period of time. Weisberg received approximately $75,638 in commissions for these trades while the customer lost approximately $55,627.
FINRA Department of Enforcement also claims in the AWC that Weisberg used discretion for 21 trades without prior approval to exercise discretion on the account from the elderly customer or from Worden. Further, Weisberg allegedly placed an additional 17 discretionary trades for another customer in August 2018 without obtaining authorization from the customer or Worden.
Accordingly, David Weisberg violated NASD Rule 2510(b) and FINRA Rules 2111 and 2010. Without admitting or denying the allegations made against him, Weisberg consented to an eleven-month suspension from associating with any FINRA member firm in any capacity, a $7,500 fine, disgorgement of $75,538, plus interest and ten hours of continuing education about excessive trading.
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