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April 19, 2019 at 10:16 AM
The Financial Industry Regulatory Authority barred Edward Beyn, who was previously a registered broker, from association with any FINRA member in all capacities.
Beyn previously worked at Rothschild Lieberman, following stints at two now FINRA-expelled firms, Craig Scott Capital and Brookstone Securities.
According to FINRA’s findings, Beyn churned and excessively traded customer accounts.
“The level of trading demonstrates that Beyn traded the accounts to generate revenue for himself and his member firm,” FINRA states.
The findings also stated that given the costs charged by Beyn and the firm, the accounts had virtually no chance of breaking even, much less realizing any gains for the customers no matter how the underlying investments performed.
While Beyn’s customers experienced total losses of almost $3 million, Beyn earned almost $650,000 from the trading in the accounts, all in the form of markups and markdowns.
Beyn employed the earnings play strategy in trading the customer accounts and effected the transactions in the accounts on a riskless principal basis, charging the customers markups and markdowns rather than commissions.
Beyn chose the investments, including the volume and frequency of the trading, in his customers’ accounts. Meanwhile, the customers — who did not have sufficient investment experience and understanding to make an independent evaluation of his recommendations — routinely followed those recommendations.
The level of trading by Beyn in the customers’ accounts was grossly inconsistent with their investment objectives and financial and personal experiences.
Beyn traded all the accounts the same, regardless of the listed investment objective and the customer’s age or stated financial condition.
The turnover rates and cost-to-equity ratios were outrageously high and demonstrated that Beyn traded the accounts without any regard for the best interest or investment objectives of his customers, according to FINRA.
FINRA Fines Kestra for Overcharging Customers for Fund Purchases
FINRA censured and fined Kestra Investment Services $225,000 for disadvantaging certain retirement plan and charitable organization customers who qualified for, but did not receive, the applicable mutual fund sales charge waiver or appropriate share class.
These sales disadvantaged eligible customers by causing such customers to pay higher fees than they were actually required to pay. Between July 1, 2009, and February 22, 2018, the firm overcharged eligible customers approximately $1.65 million for mutual fund purchases made.
As part of this settlement, the firm agrees to pay restitution to eligible customers, which is estimated to total $1.9 million (i.e. the amount eligible customers were overcharged, inclusive of interest).
According to FINRA, customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge were instead sold Class A shares with a front-end sales charge, or Class B or C shares with back-end sales charges and higher ongoing fees and expenses.
