by Brian Mahany
James Konaxis was quite the guy apparently. In just a few years he was associated as a stockbroker (registered representative) with a half dozen different brokerage firms – Raymond James, Morgan Stanley & Sentinel Securities, to name a few. He also had quite a track record of severe regulatory violations. Nothing, however, like the most recent violation – taking money from the widow of a one of the people killed in the 9/11 terrorist attack on the Pentagon.
In October 2010, a customer complained that Konaxis lied, churned the client’s account and made unsuitable investment decisions. That case settled for a $100,000 earlier this year. Raymond James employed Konaxis at the time.
The month prior, in September of 2010, another customer complained about churning and unsuitable recommendations. That case also settled for $100,000. Konaxis was then employed by Morgan Stanley.
That’s not all, however. In August of 2010 (within two months of the other two complaints), yet another customer complained. Once again the complaint alleged churning and unsuitable recommendations. The victim in this case is the widow of a victim of the terrorist attack on the Pentagon in 2001. The money lost by the victim represents the bulk of her victim compensation money.
According to the Financial Industry Regulatory Authority (FINRA), the victim’s account quickly dropped from $3.7 million to $1.6, all while Konaxis reaped over a half million dollars in commissions.
For readers not familiar with the term, “churning” refers to the practice of trading a client’s account over and over again simply to earn more commissions. Churning is illegal.
Whereas FINRA simply stood by and other firms kept hiring Konaxis, the SEC finally stepped in and is seeking to permanently bar him from the industry.
Is there a lesson here? First, always check your broker and brokerage firm through FINRA’s broker check system. It’s free and easily searchable on-line. If there is a history of jumping from firm to firm, ask questions. If there is a history of severe regulatory violations, run away.
Second, the firms employing bad brokers such as Konaxis are usually liable for the misconduct and negligence of their employees. Brokerage firms have a duty to supervise and monitor the activities of their people. If they fail, they too can be held liable. Even if the individual stockbroker is fired or long gone, the broker dealer may still be on the hook for your losses.
If you lost money because of a stockbroker’s negligence or fraudulent conduct, contact a lawyer that concentrates in cases against stockbrokers, investment advisors and other financial professionals.
Mahany & Ertl is a full service boutique law firm concentrating in asset recovery and stockbroker fraud. We help people all over the country recover their hard earned money. Our services can often be performed on a contingent fee basis meaning you don’t pay unless we collect. For more information and a no nonsense review of your case, contact attorney Brian Mahany at (414) 704-6731 (direct) or at firstname.lastname@example.org.
Mahany & Ertl, LLC – Milwaukee, Wisconsin: Detroit, Michigan & Portland, Maine. Services performed nationwide.