Subscribe to our mailing list

* indicates required







We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.


Stay Informed with the latest fanancialish news.




Investments - Unsuitable

Retired Investor Gets Trolled by His Broker

April 2, 2020

by Howard Haykin



Upon retirement, individuals typically adopt a conservative approach to investing. They’re inclined to hold a sizeable number of bonds to ensure a steady stream of income, they buy and hold investments rather than engage in speculative trading, and they seek preservation of capital. 
However, that wasn’t the case for one retired investor whose broker ‘took him for a ride’.



Over a 2-year period, a broker with Cape Securities excessively traded three of his customer’s accounts – all belonging to an individual who had retired 7 years earlier. Apparently in need of cash, the Columbus, GA-based broker generated $63,000 in commissions and trading costs, along with $40,000 in portfolio losses.



WHAT DOES EXCESSIVE TRADING LOOK LIKE?    According to securities regulator FINRA, the customer’s 3 accounts (with average combined equity of ~$131,000) had all the tell-tale signs of excessive trading.


  • Portfolio Turnover Rates … for the customer’s 3 accounts were 10, 8 and 7.
    • Rates typically range between 0 and 1, but can be higher in actively traded accounts.
    • Rate is computed by taking acquisitions or dispositions in an account, whichever is greater, and dividing it by average monthly assets in that account.


  • Cost-To-Equity Ratios … for the customer’s 3 accounts were 53%, 44% and 37%.
    • Ratios in excess of 20% generally indicate excessive trading. [FINRA Case #2014039091903]
    • Ratio is obtained by dividing total expenses by average monthly equity.


  • Commissions and Trading Costs … for the customer’s 3 accounts totaled $63,000.


  • Overall Losses … for the customer’s 3 accounts totaled $40,000.


  • The broker recommended almost all the trades in the customer’s accounts.



SAFEGUARDING YOUR PORTFOLIO.    Brokerage customers should not rely solely on regulators to protect their investments. If you notice that the broker essentially controls your account or is executing numerous trades each and every month, it’s time to bring in a trusted, independent financial watchdog, - someone who can review your portfolio for possible mismanagement.



[For further details, click on … FINRA Case #2018057846301.]