Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker/advisor James William Flower (CRD # 2817701) was recently the subject of disciplinary proceedings brought by FINRA’s Department of Enforcement. A Complaint was filed by FINRA’s Department of Enforcement on April 10, 2020 as part of an ongoing investigation into excessive and unsuitable trading (“churning“) and unauthorized trading. The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding Mr. Flower.
Registration Background for James William Flower
Mr. Flower first became registered in the securities industry in 1996 and is currently registered with Garden City, NY based Spartan Capital Securities, LLC (CRD # 146251). His prior registrations include SW Financial (CRD# 145012) from December 2015 to June 2019, Laidlaw & Company (UK) Ltd. (CRD # 119037) from May 2014 to November 2015 and Global Arena Capital Corp. (CRD # 16871) from May 2010 to November 2014.
According to FINRA’s April 10, 2020 Complaint, Mr. Flower allegedly engaged in excessive account trading (“churning”) in multiple clients over a period of time exceeding two years. Specifically, the complaint alleged:
- “Between January 1, 2016 and July 31, 2018 (the “Relevant Period”), Respondent James W. Flower, while associated with SW Financial (the “Firm”) (CRD No. 145012), churned and excessively traded five customers’ account”;
- “[Mr.] Flower’s trading in these customers’ accounts resulted in annualized cost-to-equity ratios ranging from 69% to 176%, annualized turnover rates from 16 to 33, and realized losses totaling over $220,000 while generating more than $210,000 in commissions and fees”;
- “[Mr.] Flower’s churning and excessive trading made it virtually impossible for any of these customers to make a profit”;
- “As a result of the foregoing, [Mr.] Flower willfully violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, and also violated FINRA Rules 2111, 2020 and 2010”;
- “During the Relevant Period, [Mr.] Flower also placed 18 unauthorized trades in one customer’s account (that also was churned and excessively traded) in violation of FINRA Rule 2010”; and
- “Finally, [Mr.] Flower caused inaccuracies in his Firm’s books and records during the Relevant Period by mismarking solicited sales transactions in those accounts as “unsolicited” in violation of FINRA Rules 4511 and 2010.”
James William Flower has a History of Regulatory Sanctions
In addition to the current investigation, Mr. Flower has been the subject of at least one previous action brought by FINRA’s Department of Enforcement alleging unsuitable recommendations to customers. On June 12, 2017, Mr. Flower entered into a Letter of Acceptance, Waiver and Consent (AWC) with FINRA. According to the June 12, 2017 AWC, Mr. Flower consented to, without either admitting to or denying the following findings:
- “During 2013 and 2014, [Mr. Flower] recommended that thirteen of his customers invest in a security known as the iPath S&P 500 VIX Short Term Futures ETN (“VXX”), a highly volatile exchange-traded note, without having a reasonable basis for recommending the transactions”; and
- “As a result of this conduct, [Mr.] Flower violated FINRA Rules 2111 and 2010.”
In addition to FINRA’s findings in that matter, Mr. Flower agreed to the following sanctions:
- A three month suspension from association with any FINRA member firm in any capacity; and
- “The requirement that within 60 days of the date of the Notice of Acceptance of this AWC, [Mr.] Flower will undertake to attend and satisfactorily complete ten hours (10) hours of continuing education concerning complex products, which includes exchange traded notes, by a provider not unacceptable to FINRA. Within 30 days of following completion of such training, [Mr.] Flower will submit written proof that the continuing education program has been satisfactorily completed.”
James William Flower has a History of Customer Complaints
In addition to the findings of FINRA’s Department of Enforcement, FINRA BrokerCheck for Mr. Flower reveals he has a history of customer complaints including but not necessarily limited to the following:
- On September 22, 2015 a customer initiated complaint was filed alleging churning and unsuitability. The customer alleged damages in the amount of 90,000.00. The complaint was eventually settled on November 12, 2015 in the amount of $45,000.00;
- On April 15, 2010 a customer initiated complaint was filed alleging misrepresentation, failure to execute an order and misrepresentation of the utilization of margin. The complaint evolved into an arbitration on December 27, 2010. The complaint alleged damages in the amount of $100,000.00. The complaint was settled in the amount of $67,500.00 on June 17, 2011, with Mr. Flower responsible for contributing the full settlement amount;
- On September 18, 2015 a customer initiated complaint was filed alleging over-concentration, unsuitability, excessive use of margin and churning. The customer alleged damages in the amount of $250,000.00. On August 1, 2016, the complaint was denied; and
- On April 27, 2006 a customer initiated complaint was filed alleging Mr. Flower failed to place a stop loss order as instructed. The customer alleged damages in the amount of $21,000.00. On May 2, 2006 the customer withdrew the complaint.
If you or someone you know has or had a brokerage account with Mr. James William Flower and have concerns regarding losses in your investments or possible sales practice violations including fraud and negligence, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.