According to FINRA, Edward Scott Short was assessed a deferred fine of $5,000, suspended from association with any FINRA member in all capacities for seven months, and ordered to pay $116,859, plus interest, in deferred restitution to customers for willfully violating the Best Interest Obligation under Regulation BI by recommending a series of trading in an elderly customer's account that was excessive, unsuitable, and not in the customer's best interest.

The customer relied on Short's advice and routinely followed his recommendations and, as a result, Short exercised de facto control over the customer's account. As a result of Short's trading, the customer's account generated $116,859 in commissions and resulted in approximately $185,000 in trading losses, an annualized cost-to-equity ratio of 76.53 percent, and an annualized turnover rate of 47.49.

The suspension was in effect from February 6, 2023, through September 5, 2023.

This case involves egregious excessive trading that caused substantial harm to an elderly customer. The cost-to-equity ratio of 76.53 percent is extraordinarily high and means that the customer would have needed to earn returns of over 76 percent just to break even after paying commissions. This is far beyond what any reasonable investor could expect to earn.

The turnover rate of 47.49 means that the entire value of the account was turned over more than 47 times in a year, indicating an extremely aggressive and unreasonable trading strategy. The trading generated $116,859 in commissions for Short while causing the customer to suffer approximately $185,000 in trading losses. This clearly demonstrates that the trading was designed to generate commissions for Short rather than to benefit the customer.

The fact that the customer was elderly and relied on Short's advice makes this violation particularly serious. Elderly investors are often more vulnerable to abusive practices and may be less able to recover from significant financial losses. Short's de facto control over the account meant the customer trusted him to make appropriate investment decisions, but Short violated that trust by engaging in excessive trading that benefited himself at the customer's expense.

The seven-month suspension and substantial restitution order reflect the severity of the harm caused to the customer. This case serves as a reminder that brokers must always act in their customers' best interest, not their own financial interest.