WARNING! Impending Investigation: ZACHARY BADER and CRAIG SCOTT CAPITAL, LLC
Zachary Bader and Craig Scott Capital, LLC
Have you lost money with financial advisor Zachary T. Bader of Uniondale and Melville, New York? We are investigating allegations made by FINRA, the Financial Industry Regulatory Authority, against Zachary T. Bader. FINRA barred Bader from the securities industry after he was alleged to have excessively traded or churned at least three customers’ accounts.
According to FINRA’s allegations, from February 2012 to July 2013, Zachary Bader excessively traded or churned his customers’ accounts. FINRA also alleged that customers’ accounts had turnover ratios ranging from 19 to 283. Additionally, the cost-equity ratios ranged from 59% to 1,082%. It was also alleged that Bader sold his customers an investment in an exchange traded note called Barclays iPath S&P 500 VIX Short Term Futures ETN. Bader did not understand the mechanics of this investment and should not have sold it to his customers.
Excessive Trading or Churning
One of the most common ways to determine whether the account was excessively traded or churned is to determine the annual turnover ratio. This ratio shows how often the securities in the account are bought or sold within a year. Authority has held that an annual turnover of 4 or more is a “presumption” of churning, and an annual turnover of 6 or more is a “conclusion” of churning. Thus, if the accounts had turnovers over 6, then there would be a conclusion that there was churning or excessive trading. Since Bader’s customers’ accounts had significantly higher annual turnover ratios, his trading was excessive.
Another way to determine whether there was excessive trading is the cost equity ratio. This ratio takes the commissions generated by the trading, divided by the average value of the account. This ratio essentially determines the returns that an account needs to make just to break even. Thus, an account with a cost-equity ratio of 59% would need to earn 59% annually just to break even from all the costs of trading.
Zachary Bader was a financial advisor and registered representative of Craig Scott Capital LLC from February 2012 to August 2013. He was also affiliated with National Securities Corp. from August 2013 to August 2014. He worked at branch offices in Uniondale and Melville, New York.
Brokerage firms like Craig Scott Capital have a responsibility to adequately supervise all representatives who are registered through their firm. Brokerage firms also must take steps to ensure that their financial advisors follow all securities rules and regulations, as well as internal firm policies. When brokerage firms fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers.
Israels & Neuman PLC is a securities and investment fraud law firm with offices in Denver, Colorado and the Seattle area. We represent investors in FINRA arbitration proceedings in all 50 states, including investors in New York. Our attorneys have represented over one thousand investors against many brokerage firms in the past, including LPL Financial, Merrill Lynch, Morgan Stanley, Smith Barney, Stifel Nicolaus & Company, UBS Financial Services, Oppenheimer, Charles Schwab, Wells Fargo Advisors, Ameriprise Financial Services, Raymond James, ProEquities, Securities America, National Securities Corp., and many others.
HAVE YOU LOST MONEY WITH ZACHARY BADER, NATIONAL SECURITIES CORP. OR CRAIG SCOTT CAPITAL?
Denver Office: (720) 599-3505
Seattle Office: (206) 795-5798
Click to view: Bader FINRA AWC
Click to view: Bader BrokerCheck 11.13.15
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DENVER: (720) 599-3505
SEATTLE: (206) 795-5798