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FINRA Brings Action Against Former SW Financial Broker William Athas For Alleged Churning

William Athas (CRD#: 3165470) is a previously registered Broker.

Broker’s Background

He entered the securities industry in 1999 and previously worked for SW Financial; Worden Capital Management, LLC; K.C. Ward Financial; Securities America, Inc.; Dalton Strategic Investment Services, Inc.; CBG Financial Group, Inc.; Aegis Capital Corp.; Avalon Partners, Inc.; Liberty Partners Financial Services, LLC; J.W. Cole Financial, Inc.; J.P. Turner & Company, LLC; Emmett a. Larkin Company, Inc.; and Seaboard Securities, Inc.

Current And Past Allegations Of Conduct Leading To Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in January 2022, a regulatory action initiated by FINRA was pending against William Athas. The FINRA sanction states, “Athas was named a respondent in a FINRA complaint alleging that he willfully violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and violated FINRA Rule 2020 by churning customer accounts. The complaint alleges that Athas controlled the trading in the customer accounts, the volume and frequency of trading in the accounts, decided what securities to buy and sell, the quantity of each transaction, and the timing of each transaction. Athas also determined the commission he would charge for each transaction. The customers routinely followed Athas’ recommendations. Athas deliberately incurred unreasonably high trading costs in these customers’ accounts, which made it virtually impossible for the accounts to be profitable. Athas persisted in his trading activity even after being warned about the excessive level of trading and high costs in these customer accounts on several occasions. The complaint also alleges that Athas’ trading in these accounts was excessive and quantitatively unsuitable for each of the customers based on their investment profiles, as evidenced by the high turnover rates and cost-to-equity ratios, the frequency of the transactions, and the transaction costs incurred. Athas’ churning and excessive trading caused the customers to pay approximately $1.6 million in commissions and other trading costs and to suffer approximately $1.1 million in losses. Conversely, Athas generated commissions of approximately $1.5 million for himself and his member firms. The complaint further alleges that Athas recommended that the customers engage in short-term, in-and-out trading, often on margin, without having a reasonable basis to recommend that trading strategy to his customers. Athas’ recommended strategy therefore was not suitable. Athas failed to perform reasonable diligence to understand the cumulative costs of his trading, including commissions, other trading costs, and margin interest. Athas also failed to perform reasonable diligence to understand the impact of these cumulative costs on the value of his customers’ accounts or the ability of his customers to earn a profit. Athas also failed to understand turnover rates and cost-to-equity ratios, and therefore failed to calculate and consider these metrics when recommending and executing a short-term, in-and-out trading strategy in his customers’ accounts.”

For a copy of the FINRA disciplinary action, click here.

In addition, William Athas has been the subject of nine customer complaints, including one that remains pending, including the following:

  • May 2020 – “Unsuitable trading; common law fraud; churning; breach of contract; negligent supervision; breach of fiduciary duty. Dates of activity 5/2/2019 to 4/23/2020.” Damages of $84,932.35 are requested, and the customer dispute is pending.
  • January 2017 – “Violations of Texas State Securities Act, Negligence and gross negligence, Breach of Contract, Breach of Fiduciary Duty, Misrepresentations and Omissions; and Violation of FINRA rules and industry standards of conduct regarding: Churning, Unauthorized Trading (unauthorized use of discretion)suitability, Know Your Customer Rules, Excessive trading, Unauthorized use of margin, Duty of good faith and fair dealing, Equitable principles of trade, use of Manipulative, Deceptive or Fraudulent Devices or contrivances. Dates of alleged activity was November 2014 through December 2015.” The customer dispute was settled for $95,000.
  • April 2015 – A civil judgment/lien in the amount $5,243 was levied against William Athas.
  • July 2011 – “CHURNING AND EXCESSIVE TRADING.” The customer dispute was settled for $10,000.
  • July 2009 – “CLIENT CLAIMS CHURNING, UNSUITABILITY, NEGLIGENCE, BREACH OF CONTRACT, MISREPRESENTATION AND OMISSIONS. ALLEGATIONS ARE AS A RESULT OF 11 STOCK TRADES EFFECTED BETWEEN 8/28/06 AND 10/22/07.” The customer dispute was settled for $30,000.
  • January 2008 – “FAILURE TO PLACE A STOP ORDER WHICH RESULTED IN MARKET LOSS.” The customer dispute was denied.
  • December 2005 – “CUSTOMER ALLEGES UNAUTHORIZED TRADES.” The customer dispute was settled for $40,000.
  • August 2005 – “CLIENT ALLEGES UAT; ALLEGES BEING CHARGED MARGIN INTEREST ON ACCOUNT.” The customer dispute was settled for $906.61.
  • January 2004 – “CLAIMANT ALLEGES THAT DURING OCTOBER – DECEMBER 2003, UNAUTHORIZED TRADES WEE EXECUTED IN HIS ACCOUNT AND THAT SOME COMMISSIONS WERE EXCESSIVE. NO $$ FIGURE CITED.” The customer dispute was settled for $8,600.
  • August 2001 – “CUSTOMER COMPLAINT REGARDING LOSSES DUE TO MARGIN TRADING.” The customer dispute was denied.

For a copy of William Athas FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses

Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation. Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]