According to FINRA, Stewart Ginn (CRD #4503197), based in Encinitas, California, was fined $50,000, suspended from association with any FINRA member in all capacities for 18 months, and ordered to pay $115,000, plus interest, in restitution to a customer. The suspension is in effect from September 16, 2024, through March 15, 2026.

Without admitting or denying the allegations, Ginn consented to the sanctions and to the entry of findings that he willfully violated Regulation Best Interest (Reg BI) by excessively trading customer accounts. None of the customers, some of whom were seniors, was an aggressive investor. Ginn engaged in frequent in-and-out trades while charging high commissions on both buys and sells. His trading caused customers to incur realized losses of more than $2.22 million while generating more than $2.24 million in commissions for him and his member firm. Ginn routinely recommended large equities positions that he often quickly sold, even when the price had changed only minimally. The series of recommendations was found not to be in those customers' best interests. Ginn also improperly traded on discretion in a majority of the customer accounts without obtaining customer authorization for each transaction. His trading resulted in annualized cost-to-equity ratios of between 14 percent and 27 percent.

This case is notable for the severity of the harm caused and the magnitude of the sanctions imposed. The finding that Ginn willfully violated Reg BI is particularly significant. Regulation Best Interest, which took effect in June 2020, requires broker-dealers and their associated persons to act in the best interest of the customer when making a recommendation. A willful violation of Reg BI carries additional regulatory consequences, including potential statutory disqualification.

The financial metrics in this case paint a stark picture. The annualized cost-to-equity ratios of 14 to 27 percent mean that customers' accounts would have needed to generate returns of that magnitude just to break even after commissions. The fact that customers suffered more than $2.22 million in losses while Ginn and his firm collected over $2.24 million in commissions demonstrates that the trading activity served the broker's interests, not the customers'. Additionally, trading on discretion without proper authorization strips customers of control over their own accounts.

Investors should understand that Reg BI creates an enforceable standard requiring brokers to prioritize their customers' interests. Excessive trading and unauthorized discretionary trading are clear violations of this standard. This case is a powerful example of the consequences that follow when a broker puts their own financial gain ahead of their clients' well-being.