Florida Broker Barred For Failure To Cooperate With Investigation Into Alleged “Churning”
Nathan Gersteen Katz (CRD #846475) is a previously registered FINRA broker and investment adviser. From June of 2001 to August of 2018, Mr. Katz was a representative of Triad Advisors LLC in Largo, Florida. After that, he served as an investment adviser for American Independent Securities Group LLC from October of 2018 to January of 2021.
Recently, Nathan Gersteen Katz was barred from the securities industry after failing to cooperate with an investigation into allegations that he improperly “churned” mutual funds held by his customers (FINRA Case # 2018057352601). Here, our Miami churning lawyer discusses the findings made by the Financial Industry Regulatory Authority (FINRA).
Broker Sanctions: Nathan Gersteen Katz Formerly of American Independent Securities Group
The Financial Industry Regulatory Authority (FINRA) launched an investigation into the professional conduct of former Florida broker Nathan Gersteen Katz following allegations that he violated a number of different securities regulations while working as a registered representative of American Independent Securities Group in Largo, Florida. Among other things, FINRA reviewed allegations that Mr. Katz:
- Recommended an unsuitable switching strategy of short-term mutual funds to investor (churning);
- Forged a customer’s signature on official investment documents; and
- Improperly exercised trading discretion in a non-discretionary brokerage account (unauthorized trading).
As part of its investigation, FINRA requested relevant financial documents/records and on-the-record testimony from former Florida broker Nathan Gersteen Katz. In violation of FINRA Rule 8210, Mr. Katz knowingly refused to cooperate with the review. Without admitting or denying misconduct, former financial advisor Nathan Katz has consented to penalties including an indefinite bar from the securities industry.
Churning of Investments: Quantitative Unsuitability
Notably, the allegations in this case center around the fact that Mr. Katz supposedly advised customers to engage in a short-term mutual fund switching strategy. There are allegations that the strategy was quantitatively unsuitable—or as it is sometimes called “churning.” Churning occurs when a broker/financial advisor recommends an unreasonable high number of frequent trades. Each time a transaction is completed, the broker receives a commission payment. The fees become so high that it is all but mathematically impossible for an investor not to suffer losses.
In other words, churning is a form of quantitative unsuitability. A high number of frequent trades—such as allegedly occurred with the short-term mutual fund switching strategy recommended in this case—is unsuitable for most retail investors. Under securities industry regulations, financial advisors have a professional responsibility to make suitable investment recommendations.
Call Our Miami, FL Churning Attorney for Immediate Help
At Carlson & Associates, P.A., our Florida FINRA arbitration lawyers have the professional skills and legal expertise to represent investors in churning cases. If you suffered financial losses because your advisor made an unreasonable high number of trades, we are here to help. Give us a call right away to arrange your fully private case review. From our Miami law office, our securities fraud attorneys advocate for the legal rights and financial interests of investors throughout the entire region.