Before he was discharged in September 2018 for “unacceptable practices (by the representative) relating to the timing and size of orders entered and resulting transaction charges in a client account and relating to the marking of certain orders for the account as unsolicited,” as indicated on his FINRA broker profile, Trevor Rahn was a registered representative with JP Morgan Securities in Los Angeles, CA, from 2010 onwards.
It is learned that on 19th March Rahn has been suspended by the Financial Industry Regulatory Authority (FINRA) for 18 months on allegations of having implemented an unsuitable and unauthorized trading strategy for customer orders. In addition, a fine of $10,000 has been levied.
According to the Letter of Acceptance Waiver and Consent (AWC) between FINRA and Rahn, from January 2014 to September 2018, while working with JP Morgan Securities, he repeatedly broke customer orders for execution.
The strategy adopted by Rahn was to break orders into multiple small trades which, it seems, was in pursuit of an average pricing strategy recommended by him. A direct fallout of this was the generation of additional commission which was revenue for him and a cost for his clients. There has been no evidence to prove that the recommended strategy was suitable for his customers.
The AWC also talks about the exercise of time and price discretion on over 7,500 trades, which was done without the required authorization.
That is not all. 577 unauthorized trades were executed in a customer’s account between June 2016 and September 2017 and 4714 ‘solicited’ trades were incorrectly marked as ‘unsolicited.’
Since 2016, he has been named in 6 customer complaints with allegations being “unauthorized trading and margin use in customer’s account in order to generate commissions,” and selling a private placement investment away from his member firm, among others.
What is the best course of action for a customer who suspects she could have been the subject of a similar fraud, is often a question in the minds of investors.
In the case where a broker abuses a client account in a manner that violates securities laws and FINRA regulations, apart from the broker, the securities firm could also be liable for investment losses incurred by a client as a result if they are found to be negligent in supervising the activities of the rogue broker or not having a system in place that would enable them to monitor the activities of their registered representatives. Even if a broker ‘sells away’ from the firm, the firm may still be responsible for a failure of supervision, leading to it being liable for investment losses suffered.
Haselkorn & Thibaut is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with locations in Texas, Florida, New York, Arizona, and North Carolina and is involved in investigating the liability of Trevor Rahn and his former employers may have in potential claims of fraud filed against them.
For any concerns you may have regarding past dealings with Trevor Rahn or JP Morgan Securities, please contact our securities attorneys for a free consultation to understand your options. They can be reached at 1 888-628-5590.