The Investor’s Watchdog

The Investor's Watchdog

General Securities Principal Consents to Two-Year Suspension to Resolve Allegations of Conducting Unsuitable Trading in Customers Account

Tuesday, March 24, 2020

The Financial Industry Regulatory Authority (FINRA) Department of Enforcement Office of Hearing Officers recently approved an Offer of Settlement to resolve allegations of securities industry violations against Halil Kozi, a former PHX Financial, Inc. registered representative in New York, New York.

According to his FINRA BrokerCheck report, Kozi has been associated with 18 FINRA-member firms since obtaining his securities license in 1987. Within the last few years, he has been associated with PHX Financial, Inc. from March 2013 to March 2016, Buckman, Buckman & Reid, Inc. in Little Silver New Jersey from February 2016 to May 2017 and Windsor Street Capital, LP in New York City from May 2017 to September 2017.

FINRA alleges that from June 2013 to February 2015, while working at PDX a General Securities Principal and Registered Options Securities Futures Principal, responsible for reviewing an approving options agreement forms, signing options tickets and reviewing exception runs and automated compliance alerts, Kozi exercised de facto control over and excessively traded in a customer’s account. After this customer deposited approximately $200,000 in his PHX account, Kozi recommended approximately 177 options trades and 31 equity trades, with a principal of over $3 million. FINRA asserts that not only were many of these speculative options in 29 issuers that were qualitatively unsuitable, but the transactions were inconsistent with the customer’s portfolio profile and overall lack of investing experience. FINRA further claims that Kozi over-concentrated this customer’s account in a development-stage pharmaceutical company with essentially no revenue. At one point, 85% of the issuer’s stock was comprised of this customer’s account value.

Kozi’s activity in this customer’s account resulted in a cost-to-equity ratio of 53% and generated gross commissions of over $135,000. Of the total commissions generated, Kozi directly received over $87,000 in commissions, while the customer incurred $72,000 in losses. Commissions generated from this customer alone made up 95% of Kozi’s commission income during this time period.

Kozi consented to a two-year suspension from associating with any FINRA member firm in any capacity. The Department of Enforcement is not imposing monetary sanctions due to Kozi’s demonstrated inability to pay.

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Author: Jason T. Albin

Jason Albin is an Attorney and Partner at ChapmanAlbin, the investor rights law firm. He has represented hundreds of investors who have lost money due to broker misconduct, unsuitable investment advice and fraud.​ Jason also represents individuals in “whistleblower” suits filed against unscrupulous companies that try to defraud the US federal and state governments.

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