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Florida Broker Barred For Failure To Cooperate With Investigation Into Churning

Francis Joseph Velten Jr. (CRD #2291911) is a previously registered broker and previously registered investment adviser (RIA). Most recently, this broker was associated with Summit Brokerage Service (2006 to 2018), Independent Financial Group (2018 to 2020), and Ameriprise Financial Services (2020 to 2020)—all in New Port Richey, Florida.

An investigation was launched into the professional conduct of Francis Joseph Velten Jr. following a complaint by an investor. FINRA initiated its own inquiry. Earlier this year, Mr. Velten Jr. was barred from the securities industry for his failure to cooperate with the investigation into alleged churning. Within this article, our Miami churning lawyer discusses the enforcement action by FINRA.

Barred Broker: Francis Joseph Velten Jr. Formerly of Summit Brokerage Inc. 

The Financial Industry Regulatory Authority (FINRA) launched an investigation into the conduct of broker Francis Joseph Velten Jr. after receiving a tip that he was encouraging elderly investors to “churn” their accounts. The alleged misconduct in question allegedly happened while Mr. Velten Jr. was a representative of Summit Brokerage Inc. He purportedly advised elderly investors to sell certain annuities before the maturity date—thereby generating additional commissions for himself while costing them money.

FINRA initiated an investigation into the allegations. It requested financial documents and records from former Summit Brokerage Inc. representative Francis Joseph Velten Jr. Under FINRA Rule 8210, brokers and brokerage firms have a responsibility to produce relevant information—and to provide testimony—when requested by the agency. As Mr. Velten Jr. failed to do so in violation of securities industry regulations, he was sanctioned.

 Churning is Excessive Trading to Generate Commissions, Fees—Hurts Investor 

FINRA requires brokers and brokerage firms to make “suitable” investment recommendations to clients. Churning is, by definition,  a violation of this requirement. Churning occurs when a broker makes excessive trades—generating additional commissions for themself, while costing the investor money. The motive behind churning is simple: more trades = more commissions.

Churning hurts investors in a number of ways. First, it increases the transaction costs they must pay. Second, it may cause the investor to pay taxes on short-term capital gains, rather than long-term gains, which are taxed at a lower rate. Third, churning can eat away at the underlying value of the investments, leaving the investor with less than they started with

Broker Sanctions: Francis Joseph Velten Jr. Permanently Barred from Industry 

Based on his failure to cooperate with an active investigation into alleged churning in violation of FINRA Rule 8210, former Summit Brokerage Inc. representative Francis Joseph Velten Jr. has been permanently barred from the securities industry. He cannot associate with any FINRA member firm in any capacity.

 Contact Our Miami, FL Broker Churning Attorney Today

At ​Carlson & Associates, P.A., our Miami investment fraud attorneys have the skills and expertise to represent investors who sustained losses due to churning by a broker. We are devoted to protecting the legal rights and financial interests of investors every step of the way. From our Miami office, we handle broker churning cases in Miami-Dade County, South Florida, and beyond.

Source:

brokercheck.finra.org/individual/summary/2291911

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