Securities Arbitration Lawyers BlogFINRA Suspends Efthimios George Petrou For Excessive Trading
Efthimios George Petrou (CRD# 2672840) is a registered broker last employed with Arive Capital Markets (CRD#:8060) of Ronkonkoma, NY. He was also employed by J.P. Turner & Company, L.L.C. (CRD#:43177) of Middle Island, NY, Investec Ernst & Company (CRD#:266) of New York, NY, and Royce Investment Group, Inc. (CRD#:10494) of Woodbury, NY. He has been in the industry since 1995.
Following FINRA’s 2019 cycle exam of Arive Capital Markets, it was discovered that Petrou had engaged in excessive trading for a retired client. He was a 67 year old pharmacist who had a limited understanding of the stock market.
From January 2017 through October 2018, while employed with Arive, Petrou engaged in excessive trading which included the use of margins. Petrou recommended to his customer a total of 73 trades, all placed on margin. The total of all the trades meant that this customer paid $88,348.13 for commission and trade costs $7,958.52 for margin interest, totaling $96,306.65. This cost-to-ratio was 86%, indicating that the customer’s account would have to increase by 86% to break even. Petrou’s unsuitable recommendations led to the customer losing approximately $17,000 by following his advice.
By signing the Acceptance, Waiver & Consent (AWC) letter, Petrou agreed to the following sanctions:
- A suspension from 9/6/2022 through 3/5/2023
- Civil and administrative penalties of $5,000
- Restitution to the client of $96,306.65, with interest
Petrou signed the AWC letter on 8/2/2022, and it was accepted by FINRA on 8/19/2022.
Margins And Margin Calls
Buying on margin is a way for investors to buy more securities than they would otherwise. Unfortunately, an investor can also lose more securities in the same fashion. Therefore, buying stocks on margin is best left to investors who understand how buying on margin works, and can afford to lose their entire investment if it happens. In this case, the retired investor didn’t completely understand buying on margin, but was awarded restitution for his losses by FINRA.
Many investors buy on margin not realizing that they can lose some or all their investment. A broker may also recommend a margin loan to cover losses. Trusting their broker, they allow a broker to buy and sell for them and borrow against their principal. It’s possible that your securities are sold—maybe even without your permission—and you’ll owe more than you originally invested.
If your broker suggests buying on margin, we suggest a little more due diligence and time to consider signing up. Margin and margin loans are highly profitable for brokers and broker-dealers, so it’s not something you should take lightly.
Did You Invest With Efthimios George Petrou?
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