Financial West Group Broker Sean J. Waters Barred For Churning

Sean J. Waters (CRD#: 4414180, Los Angeles, California) is a prior securities representative of Financial West Group who just got barred from the securities industry by the Financial Industry Regulatory Authority (“FINRA”). Pursuant to Letter of Acceptance, Waiver and Consent #2017054755203 dated November 28, 2018, FINRA barred Sean J. Waters for engaging in churning, excessive trading, and unsuitable trading of a Financial West Group customer’s account.
The AWC’s findings show that Waters was the registered representative for AO, a senior investor with limited investment experience. AO established an investment account in 2010, and transferred money into the account from 2010 to 2013. As a retired person, AO depended on her $275,000.00 in life savings and social security to produce income. She transferred $150,000.00 to Financial West for investment purposes.
The findings show that from January 2013 to December 2016, Waters controlled AO’s account. Notably, Waters made all of the trading decisions on AO’s behalf in both AO’s brokerage account and individual retirement account (IRA). However, Waters evidently abused that authority by making reckless decisions in the customer’s account.

Sean J. Waters Churned Financial West Group Customer's Account

Specifically, from January 2013 to March 2016, Waters made 523 trades in AO’s brokerage account. The AWC also reported that between October 2013 and March 2016, Waters made 527 trades in Waters’ IRA. In summary, Waters made 540 purchases with a $1,986,000.00 principal value, and 510 sales with a $1,972,000.00 principal value. Because of the extensive trading, Waters charged AO $115,000.00 in  fees, markups/markdowns and commissions.
FINRA Department of Enforcement stated that Waters bought and sold the same security in AO’s accounts several times over a short period of time. Waters’ excessive trading in this manner was evidenced by round-trip transactions involving forty-eight securities in AO’s brokerage account and forty-one securities in AO’s IRA.
Supposedly, because of Waters’ trading from January 2013 to December 2016, AO’s brokerage account had an annual turnover rate of 7.20. Plus, the account contained a cost-equity ratio of 41.11%, meaning that Waters had to earn 41.11% just to avoid losses. In addition, the findings show that between October 2013 to March 2016, AO’s IRA had a turnover rate of 7.23 and annualized cost-to-equity ratio of 39.85%. FINRA Department of Enforcement indicated that cost-to-equity rates exceeding 20% and turnover rates of 6 or more signal excessive trading.
The findings show that AO’s account had incurred $88,000.00 in losses. During the same time; however, Waters earned $115,000.00 in commissions. Indeed, nearly 40% of Waters’ commissions from 2013 to 2016 came directly from his trading in AO’s account.

FINRA Determines Sean J. Waters Violated FINRA Rules

FINRA determined that Waters’ trading levels failed to comport with AO’s financial situation and investment objectives. Evidently, Waters traded without having any regard whatsoever for AO’s interests. Because of this, FINRA stated that Waters violated Section 10(b) of the Securities Exchange Act and Rule 10b-5. Further, FINRA stated that Waters violated FINRA Rules 2020, 2111 and 2010.

Records show that Waters worked at Financial West Group from December 16, 2010 to April 21, 2017. He then worked for Newbridge Securities Corporation (Boca Raton, Florida) from April 21, 2017 to February 2, 2018. Now, Waters is barred from associating with any broker-dealer firm.
If you have experienced losses by investing with Sean J. Waters, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients nationwide and only charges a fee upon recovery of investment losses.