Accounts were churned. Clients lost money. It was just another day in the broker-dealer business.
J.P. Turner is an independent broker-dealer headquartered in Atlanta. The firm has 203 offices in the US, and 513 representatives. And between 2008 and 2009, three of those representatives set out to make some extra money. They ignored the investment objectives and risk tolerance of 7 clients. They churned the clients’ accounts, trading excessively to rack up commissions for themselves. The churning resulted in a turnover so high the accounts would have needed a 73.3% return just to break even.
The commissions and fees came out to $845,000. And the clients lost $2.7 million.
The SEC filed a complaint against the firm last week, and according to the complaint not only did the three representatives churn the accounts, but the firm’s supervisors ignored what was happening.
In a statement, the firm said that it is “committed to making JP Turner a market leader”, and the reps involved were fired “long ago”. But that is not much consolation for their clients, since all three are now working as reps at other firms.