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Investor Protection

Windsor Street Capital Had a Great Game Plan for a Rogue Broker

April 24, 2020

[Image: Football Game Plan /]



by Howard Haykin



Back in October 2016, Windsor Street Capital (a now defunct broker-dealer) assigned one of its General Securities Principals (“GSP“) to closely monitor the activities of a broker who required extra supervisory oversight. To facilitate this supervision, the GSP was given a Heightened Supervision Game Plan, spelling out all the steps he needed to take each and every workday.



Among other things, the GSP was required to: (i) preapprove all purchase and sale orders the broker submitted prior to execution; (ii) verify each and every order with the customer; (iii) review customer accounts for excessive trading and churning – especially those accounts appearing on Windsor Street Capital's monthly ‘Active Account Report’; and, (iv) document all reviews and follow-up activities.


However, over the next 10 months, the GSP failed to follow the Game Plan. For example, as it pertained to 2 customer accounts, the GSP:

  • Did not pre-approve trade orders for those accounts.
  • Failed to verify each order with the customers.
  • Failed to investigate when a customer’s account appeared on the Active Account Report.
  • Expressed little or no concern for the high level of speculative trading in the account of one customer, 81, who sought only “growth and income.”
  • Failed to follow up with one customer who questioned the broker’s aggressive and frequent trading in his account.


Sadly, despite his repeated failures, this GSP was given just a ‘slap on the wrist’ by securities regulator FINRA - a $5,000 fine and a 60-day suspension from serving as a supervising principal.



It doesn't take a rocket scientist or a securities professional, like myself, to recogize a Recipe For Disaster - - combine one firm with a questionable reputation with some poorly supervised rogue brokers, and you’ve got a broker-dealer that is likely to inflict significant harm on novice investors. And that's what happened at Windsor Street Capital, from at least October 2016 through July 2017.



[For further details, click on … FINRA Case #2017052475702.]