Securities Arbitration Lawyers BlogFINRA Files Disciplinary Proceeding Against Broker Stewart Ginn After Churning Allegations
Stewart Ginn (CRD# 4503197, aka “Stewart Taylor,” “Paxton Ginn Jr”) is a registered broker currently employed with Independent Financial Group, LLC (CRD# 7717) of Santa Maria, CA. His previous employers include Navian Capital Securities LLC (CRD#:145037) of Cincinnati, OH, Newbridge Securities Corporation (CRD# 104065) of New York, NY, and Chicago Investment Group, LLC (CRD# 11853, expelled by FINRA on 09/14/2010) of Chicago, IL. He has been in the industry since 2002.
During his employment and registration with Independent Financial Group (IFG), FINRA alleges that Ginn churned and over-traded five accounts he acquired in 2019 following the sudden death of a fellow IFG broker. After buying the broker’s book of business, he became the registered representative of record for those customers, including the five involved in the disciplinary action.
Four of the customers were individual retail investors. The fifth was a profit-sharing plan for a small dental practice. The four individuals had a “long-term buy-and-hold” strategy and moderate risk tolerance with their former broker with just a few trades per month. The profit-sharing plan had the same for its first account. When its second account was closed in 2022, that had changed to “moderately high.” None were aggressive investors.
Once Ginn became the new representative, he allegedly increased the frequency of trading in each account. With de facto control over each account, Ginn solicited nearly all the trades. These customers relied on his recommendations and allowed him to take care of the trading. However, in many cases, Ginn failed to seek the customers’ authorizations.
From July 2020 through December 2022, Ginn generally charged the customers 3% commission on each purchase and 2% commission on each sale. However, he did not explain these amounts to the customer, the amounts of commission he made from the purchases and sales, or how these actions impacted on their account balances. During this same period, the five customers lost a total of $2.2 million, and paid commissions totaling $2.4 million.
These customers were:
- A 79-year-old retiree
- An 88-year-old retiree and Alzheimer’s patient who died on February 04, 2022
- A 61-year-old civil engineer
- A 72-year-old retired police officer
- A profit-sharing plan for a small dental practice
Ginn’s aggressive trading in these accounts resulted in annualized cost-to-equity ratios (or break-even points) of between 14% to 27% in the customers’ accounts, making it unlikely they would realize a profit.
This action is currently pending.
Additional Disclosures
Ginn is also the subject of four related customer disputes:
- Filed on 10/19/23, this customer dispute alleges an unsuitable investment, and requests damages of $250,000. Ginn rebuts the claim. This dispute is pending.
- Filed on 9/15/2023, the customer claims that the investments were unsuitable “in light of Claimant’s age.” The customer requests damages of $1,400,000.00, and the dispute is pending.
- Filed on 3/21/2023, the customer alleges that the “accounts were subject to excessive commission charges.” The customer requests damages of $120,000.00. Ginn rebuts the claim. This dispute is pending.
- Filed on 12/6/2022, the customer alleges unsuitable investments, and that the sales in the account led to a profit and subsequent tax liability. The customer requested damages of $1,300,000, and the claim was settled by the firm for $400,000 to avoid the possible expenses of litigation and trial.
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