Joseph Fedorko Suspended by FINRA For Allegedly Executing Excessive Trades
Joseph Fedorko (CRD #: 2007317), a broker formerly registered with Laidlaw & Company (UK), was suspended by FINRA, according to his BrokerCheck record, accessed on February 10, 2022.
According to an Acceptance, Waiver, and Consent agreement dated December 17, 2021, Joseph Fedorko consented to the findings that he engaged in excessive and unsuitable trading in an account held by a senior married couple between January 2014 and December 2019.
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.
Joseph Fedorko’s alleged trading in his clients’ 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.
Joseph Fedorko allegedly executed more than 1,200 transactions in the couple’s account during the relevant period. The annual cost-to-equity ratios in the accounts ranged from 22.97% to 30.22%. For the same period, the average annual turnover rate in the account was 20.76.
The high cost-to-equity ratio and turnover rate reflect how difficult it would have been for the customers to earn high enough returns to cover the costs of the active trading. This level of trading was excessive and unsuitable for the customers. As a result, the couple allegedly incurred $1.1 million in trading losses while generating approximately $760,000 in commissions and markups for the firm. Joseph Fedorko allegedly received 25% to 50% percent of those commissions.
As part of the terms of the AWC, Joseph Fedorko consented to the following:
- A ten-month suspension from associating with any FINRA member in all capacities.
- A $7,500 fine
You can read the full copy of the AWC here.
Between 2018 and 2020, Joseph Fedorko was involved in two similar investor disputes, alleging churning and unauthorized trading. Both cases were collectively settled for $875,000.
Joseph Fedorko has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
- Series 24 – General Securities Principal Examination
Besides Laidlaw & Company (Uk), Joseph Fedorko has also worked with the following firms:
- Oppenheimer & Co. (CRD#:249)
- Josephthal & Co. (CRD#:3227)
- Gruntal & Co. (CRD#:372)
- Rickel & Associates (CRD#:7839)
- South Richmond Securities (CRD#:14913)
Kurta Law Can Help
If you have been victimized after working with Joseph Fedorko, don’t hesitate to contact us today at 877-600-0098 or firstname.lastname@example.org 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.