We want to bring to your attention a recent FINRA enforcement action that highlights the importance of proper brokerage firm supervision in protecting investors. On December 20, 2023, FINRA issued a Letter of Acceptance, Waiver, and Consent (AWC) against Richard Mireles for failing to reasonably supervise a registered representative who engaged in excessive trading and churning in customer accounts.
Under Mireles’ supervision, Stewart Ginn conducted excessive trading in multiple customer accounts between January 2018 and March 2019. This misconduct resulted in devastating losses for affected investors while generating substantial commissions for Ginn. This is a clear example of how inadequate supervision can harm innocent investors.
Understanding Mireles’ Supervisory Responsibilities
As the designated supervisor, Mireles had a significant responsibility to protect investors by monitoring trading activity and ensuring compliance with securities regulations. Despite having access to various supervisory tools and reports, FINRA found that he failed to meet his obligations under FINRA Rule 3110 regarding proper supervision.
Our investigation into this case revealed a troubling pattern. Mireles did not adequately review trading activity reports or investigate clear red flags that should have alerted him to the excessive trading occurring in customer accounts. This oversight allowed harmful trading practices to continue unchecked.
We Have Recovered Over
$350 Million for Our Clients Nationwide.
The Real Cost of Excessive Trading
The impact on investors was severe. When brokers engage in churning and excessive trading, they generate high commission costs that can quickly erode investment capital. In this case, customers reportedly suffered substantial financial losses while their accounts were being excessively traded.
FINRA’s findings were particularly concerning. They showed turnover rates and cost-to-equity ratios in the affected accounts far exceeding acceptable industry standards. This level of excessive trading should have triggered immediate supervisory intervention.
FINRA’s Enforcement Response
In response to these serious supervisory failures, FINRA imposed the following sanctions on Richard Mireles:
A four-month suspension from associating with any FINRA member firm in any principal capacity
A $5,000 fine
A requirement to requalify by examination before acting in any principal capacity with a member firm
Our lawyers are nationwide leaders in investment fraud cases.
Protecting Your Investment Rights
If you’ve experienced losses due to excessive trading or churning in your investment accounts, we want you to know that you have rights and options for recovery. Our experienced securities attorneys are here to help evaluate your case and pursue claims against brokers and firms that fail to properly supervise trading activities.
We understand how devastating investment losses can be, and we’re committed to helping you recover. Contact our team today for a free consultation to discuss your potential claims and learn how we can help protect your investment rights.
Recovering Losses Caused by Investment Misconduct.