March 16, 2016-Uniondale, New York
Beyn’s Excessive Trading Generated Commissions of $1.7M
The Financial Industry Regulatory Authority (FINRA) filed a complaint against former Craig Scott Capital broker Edward Beyn alleging that Beyn excessively traded and churned six customer accounts generating commission of $1.7 million.
FINRA alleges that Beyn:
- aggressively traded his customers’ accounts without regard to the suitability of the trading
- used a short term trading strategy as a means to turn over the accounts and quickly generate outsize commissions
- charged unusually large commissions charging an agency commission or principal markup of 3-5% plus an additional $99 firm commission on each trade
Beyn’s Allleged Victims
A summary of FINRA’s description of the alleged victims:
- Customer EK-Owner of a construction company in Georgia, age 65, limited prior investing experience who told Beyn the $350,000 he was entrusting to him was his life savings and was earmarked to buy the building for his business. In about 15 months Beyn executed 115 transactions in the account generating commissions of over $188,000. Loss in the account– $241,886.
- Customer EH-Owner of a construction company in Texas, age 69, entrusted Beyn and Craig Scott Capital with $1.4 million in his IRA account. In about 26 months Beyn executed 398 trades in the IRA account generating commissions of over $426,000. In the individual account which had been funded with $738,000, Beyn traded nearly $500,000 during the first two weeks of having the account, executing 323 trades and generating commissions in excess of $261,000. Combined losses in the account–$1.56 million.
- Customer TP– Owner of a construction company in Texas, age 71, opened opened multiple accounts with Beyn and Craig Scott Capital. An IRA account funded with $1.43 million was excessively traded, generating nearly $600,000 in commissions and losing over 50% in less than two years.
- Customer JBO– Owner of a welding equipment sales company, age 72, opened an account with Beyn after receiving a cold call from him. He had no prior investment experience and suffered ongoing health issues with frequent hospital stays. After entrusting Beyn and Craig Scott Capital with about $66,000, during a 2 week period in 2014, Beyn made over $1 million in trades, on margin, generating $65,000 in commissions leaving just $679 in the account.
- Customer WR-A 61 year old man seeking a ‘more conservative approach for his investments’ opened an account with Beyn and Craig Scott Capital with $60,000 and a second account with about $100,000. As in the other cases, Beyn traded the account excessively resulting in losses of $139,000.
- Customer BM– A 61 year old owner of an airline part company opened his account in 2015 as a Simplified Employee Pension (SEP). WIthin the first month Beyn made over $469,000 in trades, on margin, in the account. Losses in the account exceeded $65,000.
Total commissions, according to the FINRA complaint, exceed $1.7 million. FINRA states in the complaint, “Based on the level of trading and commissions charged, there was little to no possibility that the Customers would profit from such trading”.
The complaint seeks sanctions, including monetary sanctions.
Beyn was registered with Craig Scott Capital from 1/2012-9/2015. He was named in a FINRA arbitration in which the customer alleged that he excessively traded the account and recommended unsuitable investments. That case was settled for $178,400.
Broker dealers have a duty to supervise their brokers to prevent this type of abuse. If you had an account handled by Edward Beyn that suffered losses, you may be entitled to collect damages from his former employer, Craig Scott Capital.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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