According to FINRA, Palmery Robert Desir was fined $5,000 and suspended for four months for excessively and unsuitably trading a customer's account. Restitution was not ordered because the customer initiated an arbitration pertaining to Desir's excessive trading.

The customer's account had an average equity of approximately $700,000, and Desir recommended that the customer place trades with a total principal value of $3,860,000. The customer relied on Desir's advice and accepted his recommendations. Collectively, Desir's recommended trades caused the customer to pay over $134,900 in commissions and other trading costs, resulting in an annualized cost-to-equity ratio of 20 percent. This means the customer's account would have had to grow by more than 20 percent annually just to break even.

Excessive trading, also known as churning, occurs when a representative trades a customer's account primarily to generate commissions rather than to benefit the customer. A 20 percent cost-to-equity ratio is extraordinarily high and clearly excessive. For context, a conservative long-term investor might expect annual returns of 6-8 percent. When trading costs consume 20 percent of the account value annually, the account would need to generate returns far exceeding normal market returns just to avoid losses.

The $3,860,000 in total principal value of trades in an account with $700,000 average equity represents extreme turnover. This level of trading activity suggests the account was being churned through frequent buying and selling of securities, each transaction generating commissions for Desir while devastating the customer's account through trading costs.

The fact that the customer has initiated an arbitration indicates they recognized the harm caused by this excessive trading and are seeking to recover their losses. Arbitration is the process most customers use to pursue claims against their brokers and firms for misconduct.

For investors, this case illustrates the devastating impact excessive trading can have on account performance. High levels of trading activity, particularly in accounts meant for long-term growth, should raise immediate red flags. Investors should carefully review their account statements to understand total trading costs as a percentage of account value. As a general rule, if annual trading costs exceed 4-5 percent of account value, the trading is likely excessive. This case's 20 percent cost-to-equity ratio is spectacularly high and clearly unsuitable. Investors experiencing high levels of trading activity should question their representative and consider whether the trading serves their interests or primarily generates commissions. The suspension is in effect from June 21, 2022, through October 20, 2022.