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Douglas Rosenberg Suspended By FINRA Following Churning Allegations

Mar 11, 2022 Excessive Trading

Douglas Rosenberg (CRD #: 3214215), a broker registered with Joseph Stone Capital, was suspended by FINRA, according to his BrokerCheck record, accessed on February 10, 2022. 

Churning Allegations

According to an Acceptance, Waiver, and Consent agreement dated December 1, 2021, Douglas Rosenberg consented to the findings that he allegedly engaged in excessive and unsuitable trading in the accounts of three customers. This allegedly lost his customers a total of $154,000 and paid Douglas Rosenberg $89,652 in commissions. 

What is Churning?

Churning is another term for excessive trading, which occurs when brokers execute trades simply for the sake of generating commissions for themselves, without any financial benefit for their investors. It is prohibited under FINRA Rule 2111, under "quantitative suitability." Quantitative refers to the fact that the number of securities can be unsuitable as well as the number of securities. 

Douglas Rosenberg's alleged trading of the three accounts resulted in high turnover rates and cost-to-equity ratios. 

  • The turnover rate represents the number of times that a portfolio of securities is exchanged for another portfolio of securities. 
  • The cost-to-equity ratio measures the amount an account has to appreciate just to cover the commissions and other expenses. 

For context, FINRA has stated that a turnover rate of six and an annualized cost-to-equity ratio above 20% indicates excessive trading. 

  1.  Douglas Rosenberg's trading in Customer A's account allegedly generated total trading costs of $597,236, including $18,137 in commissions, and allegedly caused $12,000 in realized losses. The account allegedly had a cost-to-equity ratio of 94%. 
  2.  His trading in Customer B's account allegedly generated total trading costs of $2,723,600, including $57,494 in commissions, and allegedly caused $100,000 in realized losses. The cost-to-equity ratio was allegedly over 49%. 
  3.  Douglas Rosenberg's trading in Customer C's account allegedly generated total trading costs of $487,857, including $14,021 in commissions, and allegedly caused $42,000 in realized losses. The cost-to-equity ratio was allegedly over 70%

According to the findings, Douglas Rosenberg's alleged trading in these three customers' accounts was excessive and unsuitable given the customers' investment profiles. 

Sanctions

As part of the terms of the AWC, Douglas Rosenberg consented to:

  1. A seven-month suspension 
  2. A $25,500 restitution payment. 

In light of his financial status, FINRA did not impose a monetary sanction. 

You can read the full copy of the AWC here.

Civil Lien

In 2021 Douglas Rosenberg became the subject of a civil lien, amounting to $45,068.01. 

Background Information

Douglas Rosenberg has passed the following exams:

  • Series 63 - Uniform Securities Agent State Law Examination
  • SIE - Securities Industry Essentials Examination
  • Series 7 - General Securities Representative Examination

He is a registered broker in four states.

Besides Joseph Stone Capital, Douglas Rosenberg has also worked with the following firms:

  • First Midwest Securities  (CRD#:21786)
  • Newbridge Securities Corporation (CRD#:104065)
  • Securities Service Network  (CRD#:13318)
  • Cantella & Co., (CRD#:13905)
  • Raike Financial Group (CRD#:38095)
  • GBI Capital Partners (CRD#:14623)

Kurta Law Can Help

If you have worked with Douglas Rosenberg and have concerns about your investments, don't hesitate to contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For nearly 20 years, Kurta Law has advocated for investors to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.