FINRA Seeking Sanctions Against Halil KoziSaturday, September 28, 2019
According to a FINRA Office of Hearing Officers Complaint, from June 2013 through February 2015, Halil Kozi churned and excessively traded a PHX Financial Inc.’s customer’s account. The customer deposited a little over $200,000 in his account at PHX. Within the span of about a year and half, Kozi allegedly recommended approximately 208 equity and options transactions, with a principal value of over $3 million. The resulting annualized cost-to-equity ratio, the amount the account had to appreciate to break even, was 53%. According to FINRA, Kozi’s recommended transactions generated gross commissions totaling over $135,000, of which Kozi received over $87,000 while the customer’s account lost $72,000. Kozi’s commissions accounted for 95% of the total commissions he made over that same time period.
FINRA alleges Kozi’s churning violated FINRA and SEC rules. According to the complaint, 103 of Kozi’s transactions were unsuitable, speculative options transactions which were inconsistent with the customer’s lack of options experience, his balanced growth investment objective, his moderate risk profile, or his financial situation and needs. According to FINRA, Kozi also over-concentrated the customer’s account in a single speculative security, a development-stage pharmaceutical company with virtually no revenue. At one point, the pharmaceutical company’s stock constituted 85% of the customer’s account value, and it constituted more than 30% of the customer’s account value for 11 consecutive months during 18 total months the customer held that security. FINRA alleges these transactions were unsuitable as they were not consistent with the customer’s balanced growth objective, moderate risk profile, or his financial situation and needs.
For this alleged misconduct, FINRA is seeking sanctions against Kozi.
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