On January 20, 2021, a Financial Industry Regulatory Authority Hearing Officer barred Bryan G. Mazliach from the securities industry for:
- Recommending and effecting an unsuitable investment strategy to five customers involving in-and-out, short-term, and excessive trading.
- Executing unauthorized trades in the accounts of eight customers.
- Failing to provide documents and information requested by FINRA.
Mr. Mazliach was also ordered to pay $152,289 in restitution, plus interest, to five customers.
An order by FINRA to pay partial restitution to customers does not preclude investors from pursuing their own securities arbitration complaint to seek restitution or other available remedies.
If you have suffered financial losses investing with Bryan Mazliach or suspect that Mr. Mazliach did not have your best interest in mind when recommending investments or account transactions, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your account.
Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as First Standard Financial Company.
FINRA Department of Enforcement v. Bryan G. Mazliach (CRD No. 5518438), Disciplinary Proceeding No. 2016051583101
On September 8, 2020, FINRA filed a complaint against former Westpark Capital and LLaidlaw & Company (UK) Ltd. broker Bryan Gabriel Mazliach. This blog has previously written about FINRA’s complaint.
The complaint was served on Mr. Mazliach, but he never filed an Answer or otherwise responded to the complaint. Mr. Mazliach also failed to respond to FINRA’s request for documents and information.
FINRA Department of Enforcement filed a motion for entry of default decision, which included 14 exhibits. Mr. Mazliach did not respond to the default motion.
On January 21, 2021, Hearing Officers Bruce E. Kasold entered a decision, granting the default motion and submitting an order that bars Mr. Mazliach from associating with any FINRA member firm in any capacity for each of the following: (1) recommending and effecting an unsuitable trading strategy to customers; (2) engaging in unauthorized trades; and (3) failing to provide information to FINRA in connection with its investigation.
Excessive and Unsuitable Trading
Excessive trading occurs when a financial advisor makes many trades in a customer’s account, not to benefit the customer but to generate commissions for the broker. Excessive trading is unethical and illegal.
Between February 2015 and June 2017, while employed by Laidlaw & Company (UK) Ltd. in Fort Lauderdale, FL, Mr. Mazliach effect 419 trades in seven accounts held by five customers. The trades generated $187,526 in gross commission while the customers realized losses totaling $171,595. None of the investors were financially sophisticated, and all but one customer was 62-years or older.
There are two primary indicators used to evaluate whether a financial advisor excessively traded an account. The first is turnover rate, which represents the number of times a portfolio of investments is replaced for another portfolio of investments. Generally, a turnover rate of six suggests excessive trading, but a turnover rate below four can be excessive in some cases. As reflected in the chart below, Mr. Mazliach’s trading in the customers’ account from February 2015 through June 2017 resulted in annualized turnover rates between 12.55 and 50.48.
The second indicator used to assess whether trading is excessive in an investment account is its cost-to-equity ratio. The cost-to-equity ratio measures the amount an account must appreciate to cover commissions and other expenses. That is, how much the account needs to grow just to break-even. A cost-to-equity ratio of 20% generally indicates excessive trading has occurred. The accounts at issue had a cost-to-equity ratio between 37.02% and 218.78%!
|Gross Commissions Paid to Laidlaw||Annualized Cost-to-Equity Ratio||Annualized Turnover Rate|
|A (IRA)||2/2015 – 5/2016||88||($55,262)||$55,560||63.54%||18.85|
|A||5/2015 – 1/2016||73||($21,486)||$9,072||218.78%||49.7|
|B||4/2015 – 4/2016||47||($46,114)||$29,764||63.53%||20.73|
|B (IRA)||8/2015 – 3/2016||37||($7,854)||$27,513||37.02%||12.55|
|C||4/2015 – 6/2017||70||($15,174)||$13,957||133.07%||31.51|
|D||5/2015 – 1/2016||48||($21,805)||$33,815||78.91%||26.2|
|E||1/2016 – 8/2016||56||($3,900)||$17,845||173.53%||50.48|
FINRA concluded that Mr. Mazliach’s recommended securities transactions were excessive and unsuitable given the customers’ investment profile. FINRA also concluded that many of the trades were unauthorized and were only made to benefit Mr. Mazliach. Therefore, Mr. Mazliach violated FINRA Rules 2111 and 2010.
An in and out trading strategy refers to short-term trading in an investor’s account. In other words, buying in and selling out of securities in a short period of time with no real basis for the stockbroker’s recommendation in either the suitability of the securities or the trading strategy.
FINRA found that Mr. Mazliach recommended that customers A through E (from the chart above) engage in an active in-and-out trading strategy over periods ranging from 8 to 29 months. FINRA also revealed that it was generally not Mr. Mazliach’s practice to discuss the commission and fees he charged. In fact, he failed to keep track of the costs of these trades or consider how the costs affected his customers’ accounts. He also failed to understand or calculate the cost-to-equity ratios and turnover rates.
The recommended trading strategies would have had to generate returns of 37.02% to 218.78% just to break even. Mr. Mazliach was the only true beneficiary of the in-and-out trading. He received approximately $130,023 of the $187,526 that these customers paid in commissions, while the customers suffered losses totaling $ 171,595.
Accordingly, FINRA concluded that Mr. Mazliach lacked a reasonable basis to believe that the trading strategy was suitable for the customers, or any investor for that matter.
Unauthorized trading refers to transactions made by a broker in a customer’s account without the customer’s knowledge, authorization, or consent. A broker executing unauthorized trades in a customer’s account violates FINRA Rule 2010, requiring that financial advisors observe high standards of commercial honor and just equitable principles of trade.
As shown in the chart below, Mr. Mazliach effected 398 trades in the accounts of customers A through H between February 2015 and June 2017 without the customers’ prior knowledge and without first obtaining their authorization:
|Customer||Time Period||Unauthorized Trades|
|A (IRA||Feb. 2015 – May 2016||72|
|A||May 2015 – Jan. 2016||70|
|B||Apr. 2015 – Apr. 2016||38|
|B (IRA)||Aug. 2015 – Mar. 2016||30|
|C||Apr. 2015 – Jun. 2017||56|
|D||Jun. 2015 – Mar. 2016||38|
|E||Jan. 2016 – Aug. 2016||37|
|F||Aug. 2015 – May 2016||9|
|G||Jan. 2016 – May 2017||28|
|H||Feb. 2015 – Jun. 2015||20|
Laidlaw & Company (UK) Ltd. – Supervisory Duties
Brokerage firms like Laidlaw & Company (UK) Ltd. must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity, such as excessive trading and unauthorized trades, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to sufficiently supervise their financial advisors or the investment account activity, they may be liable for investment losses sustained by customers.
How to Recover Financial Losses or Obtain a Free Consultation
Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who understands the FINRA forum and can navigate the arbitration process to effectively advocate on their behalf.
If you or a loved one were a customer of Brya Mazliach and either sustained financial losses or suspect inappropriate activity, contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at email@example.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.