fbpixel
888-840-1571

National Investment Fraud Lawyers

¿Perdió en bonos y fondos de Puerto Rico?

Former Craig Scott Capital, LLC Financial Advisor Edward Beyn Barred by FINRA Over Churning in Customer Accounts

Posted on Saturday, September 30th, 2017 at 7:53 am    

Erez Law is currently investigating former Craig Scott Capital, LLC financial advisor Edward Beyn (CRD# 5406273) regarding churning in customer accounts. Beyn was registered with Rothschild Lieberman LLC in Syosset, New York from September 2015 to March 2016. Previously, he was registered with Craig Scott Capital, LLC in Uniondale, New York from 2012 to 2015. Beyn is not currently registered with any brokerage firm.

In August 2017, FINRA barred Beyn and the principals of Craig Scott Capital, LLC for churning customer accounts; Beyn was not ordered to pay restitution to affected customers as he is filing for bankruptcy. Between January 2012 and December 2014, “the firm and its owners had fostered a culture of aggressive and excessive trading of customer accounts.” Firm principals Craig Scott Taddonio and Brent Morgan Porges were also barred by FINRA.

According to the complaint, Beyn and the firm owners and brokers earned more than $5 million in commissions, while customers suffered more than $9 million in losses. The alleged strategy involved short-term trades in customer accounts for which customers were charged markups and markdowns instead of commissions.

In March 2016, Beyn was named a respondent in a FINRA complaint alleging that he excessively traded and churned customers’ accounts without regard to the suitability of his recommended trading. It is alleged that Beyn implemented aggressive active trading in customer accounts, regardless of if they listed speculative as their investment objective. According to the complaint, “Beyn used a short-term trading strategy in the customers’ accounts as a means to turn over the accounts quickly and generate outsize commissions for himself and his member firm. To do this, Beyn relied heavily on buying and selling equities of companies releasing their earnings reports as a catalyst for excessively trading accounts. Based on the level of trading and commissions charged, there was little to no possibility that the customers would profit from such trading.” According to the complaint, “The churning and excessive trading in the accounts of the customers resulted in annualized turnover rates as high as 188 and annualized cost-to-equity ratios as high as 573 percent.”

Additionally, it is alleged that Beyn also executed exchange traded note (ETN) transactions in the customer’s account, without reasonable grounds for believing that the risky and speculative securities were suitable for the customer. The complaint also says that “The findings stated that the trading in the customers’ accounts was excessive, as evidenced by the high turnover rates and cost-to-equity ratios, and inconsistent with the customers’ investment objectives and financial situations.” According to the complaint, FINRA calculated total commissions (including markups, markdowns, and firm commissions) of more than $1.5 million, of which Beyn’s share was about $650,000, while the customers realized losses of more than $2.9 million.

Beyn has been the subject of seven customer complaints between 2013 and 2015, one of which was denied, according to his CRD report:

October 2014. “Client alleges that he sustained losses due to excessive trading as well as certain of the trades in his accounts being unauthorized.” The customer is seeking $94,000 in damages and the case is currently pending.

September 2014. “Claimant alleges that trades were highly speculative and unsuitable the rep breached his fiduciary responsibilities as well as being negligent.” The customer is seeking $1,000,000 in damages and the case is currently pending.

September 2014. “Claimant alleges that trades were highly speculative and unsuitable the rep breached his fiduciary responsibilities as well as being negligent.” The customer is seeking $1,000,000 in damages and the case is currently pending.

September 2014. “Client contends misrepresentation by the rep with regard to the commissions and or mark up/downs charged; alleging that the rep agreed to charge no more than $99.00 on all trades.”

August 2014. “The customer initiated a kitchen sink inspired statement of claim through [firm], a group of non-lawyer legal practitioners operating in the finra arbitral forum. The statement of claim alleges fraud, negligent misrepresentation, unsuitability, violations of federal securities laws, breach of fiduciary duty and negligent supervision. The registered representative denies the allegations. The firm intends to vigorously defend the matter.” The customer is seeking $200,000 in damages and the case is currently pending.

December 2013. “The statement of claim (“Soc”) filed by this customer alleges various sales practice violations by Mr. Beyn in connection with the management of his accounts including unsuitability, excessive trading, and negligence. Mr. Beyn intends to vigorously defend himself against these allegations.” The customer sought $250,000 in damages and the case was settled for $178,500.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Craig Scott Capital, LLC may be liable for investment or other losses suffered by Beyn customers.

Erez Law represents investors in the United States for claims against former Craig Scott Capital, LLC financial advisor Edward Beyn, who is alleged to churn in customer accounts. If you were a client of Craig Scott Capital, LLC or another firm, and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.