← Broker database 2026-03-02
FINRA Charges Reid & Rudiger LLC and Brokers with Churning and Excessive Trading in Customer Accounts
According to FINRA, Reid & Rudiger LLC (CRD #47263) of New York, New York, and associated individuals — including CEO Edward Joseph Rudiger Jr. (CRD #2118724), Clifford Ronald Reid (CRD #1905920), Marc Harrison (CRD #1605568), and Kelli A. Mezzatesta (CRD #4701170) — are alleged to have engaged in churning and excessive trading in customer accounts, generating substantial costs at the expense of their customers.
The complaint alleges that the firm, Reid, and Rudiger willfully violated Section 10(b) of the Securities Exchange Act and Rule 10b-5, as well as Regulation Best Interest, by recommending a high-volume, high-cost market-timing strategy that involved repeatedly taking large equity positions in stocks — often using margin — and selling out of them after short periods to fund purchases of different stocks. This trading was allegedly unsuitable and not in customers' best interests, and was designed to maximize commissions rather than customer returns.
According to the complaint, Reid and Rudiger exercised de facto control over customer accounts because clients relied on them for trade ideas and routinely followed their recommendations. The alleged trading generated collective costs of $548,566.77 — of which $499,251.80 were commissions — and caused realized losses of $1,104,850.61 in accounts with an aggregate average monthly value of approximately $365,402.
The complaint further alleges that the firm and Rudiger failed to establish and maintain a supervisory system reasonably designed to detect and deter churning and excessive trading. The firm relied on manual suitability reviews and did not use available exception reports containing cost-to-equity ratios and turnover rates. Harrison and Mezzatesta, the supervisors responsible for overseeing Reid and Rudiger, allegedly failed to identify or investigate red flags of excessive trading and ignored available supervisory tools.
Because these are allegations in an unadjudicated complaint, no findings have been made. Churning — the practice of making excessive trades primarily to generate commissions — remains one of the most harmful practices in the retail brokerage industry and investors should monitor their accounts for signs of excessive transaction costs.