← Broker database 2024-09-13
Richard Randy Mireles Suspended by FINRA for Supervisory Failures in Excessive Trading
According to FINRA, Richard Randy Mireles (CRD #5288651), a registered principal based in San Diego, California, was fined $5,000 and suspended from association with any FINRA member in any principal capacity for four months. Without admitting or denying the findings, Mireles consented to the sanctions and to the entry of findings that he failed to reasonably respond to red flags of a registered representative who was excessively trading customers' accounts, and therefore failed to reasonably supervise. The findings stated that Mireles supervised his member firm's lower-level supervisors who reviewed certain of the firm's trade alerts and blotters, including a "high-principal solicited trade" alert. Numerous trades placed by the representative in all of the customers' accounts repeatedly appeared on that alert. Lower-level designated supervisors developed concerns that the representative was excessively trading customers' accounts and brought these concerns to Mireles' attention. However, Mireles directed the supervisor to perform only trade-by-trade assessments and not to review the series of trades for potential excessive trading. The representative excessively traded the customers' accounts, causing a level of trading inconsistent with the customers' investment profiles. Collectively, the customers paid more than $2.2 million in total trading costs and incurred realized losses totaling approximately $2.2 million. The suspension was in effect from October 21, 2024, through February 20, 2025. This case illustrates how supervisory failures can enable substantial harm to investors. Excessive trading, also known as churning, occurs when a broker trades in a customer's account primarily to generate commissions rather than to benefit the customer. Firms are required to have supervisory systems to detect and prevent this type of misconduct, and when supervisors like Mireles receive red flags, they are obligated to investigate thoroughly. By limiting the review to trade-by-trade assessments rather than examining patterns of trading activity across accounts, Mireles effectively prevented his supervisory system from detecting the excessive trading. The financial impact on customers was severe -- more than $2.2 million in trading costs and approximately $2.2 million in realized losses. For investors, this case demonstrates why account monitoring is essential. Review your statements for unusual trading frequency or unexpected losses. If your account shows high turnover with minimal returns, excessive trading may be occurring.