Trevor Rahn, a 26-year brokerage industry veteran, was fined and suspended by The Financial Industry Regulatory Authority (FINRA) over allegations that he structured trades to generate unnecessary commissions and made several unauthorized trades from January 2014 to September 2018.
Mr. Rahn, a former securities broker at J.P. Morgan, recently agreed to the authorities’ 18-month suspension and $10,000 fine.
Broker Inappropriately Advised Clients For Excessive Commissions
FINRA’s suitability rule (FINRA Rule 2111) includes a “quantitative suitability” standard that can be implicated when a series of recommended transactions, while potentially suitable in isolation, becomes excessive and unsuitable when taken together in light of the customer’s investment profile. FINRA notes that no single test defines excessive activity, but measures such as turnover rate, cost-to-equity ratio, and patterns of “in-and-out trading” may be used to evaluate whether trading was excessive. Separately, the SEC’s investor education materials describe “churning” as excessive trading primarily to generate commissions rather than to serve an investor’s goals.
He also executed over 577 unapproved trades over two years and mismarked roughly 4,714 transactions as unsolicited.
J.P Morgan Settled $910K To Former Clients
J.P Morgan fired Mr. Rahn in September 2018 for “unacceptable practices.” According to records, due to inconsistencies related to the timing and size of transaction charges in a client account and the marking of several orders as unsolicited.
Since 2016, the firm has paid $910,621 in settlements with five of Rahn’s former clients. And according to records, Mr. Rahn did not contribute to the settlements, which involved complaints about illegal and excessive trading in equities, real estate investment trusts, and closed-end funds.
The day after his termination, Jacqueline Rahn (his wife), who had worked alongside her husband for 20 years, left to join Merrill Lynch’s private wealth management group.
According to BrokerCheck, Trevor Rahn started his career at Merrill Lynch in 1992, moved to Morgan Stanley in 1999, and later joined Deutsche Bank in 2008. Jacqueline, on the other hand, began her brokerage career at Merrill Lynch in 1996.
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