Gary W. Peterson, Ameriprise Financial Services, and Excessive Trading

We are currently investigating allegations made against Gary W. Peterson, a financial advisor from Rockford, Illinois who previously worked with Ameriprise Financial Services.  The Illinois Securities Department brought a regulatory complaint against Mr. Peterson making various allegations, including that Peterson engaged in excessive trading or churning the account of at least one senior citizen.

According the Illinois Securities Department complaint, from 2009 to 2011, Gary Peterson excessively traded or churned his customer’s accounts.  It was alleged that the customer’s account had turnover ratios of 4.61, 5.95, and 6.42 in 2009, 2010, and 2011 respectively.  It was also alleged that the customer had cost-equity ratios of 4% to 6% per year.

In July 2016, Gary Peterson agreed to be barred from offering or selling securities in Illinois.

Excessive Trading or Churning

One of the most common ways to determine whether the account was excessively traded or churned is to determine the annual turnover ratio.  This ratio shows how often the securities in the account are bought or sold within a year.  Authority has held that an annual turnover of 4 or more is a “presumption” of churning, and an annual turnover of 6 or more is a “conclusion” of churning.  Thus, if the accounts had turnovers over 6, then there would be a conclusion that there was churning or excessive trading.

Another way to determine whether there was excessive trading is the cost equity ratio.  This ratio takes the commissions generated by the trading, divided by the average value of the account.  This ratio essentially determines the returns that an account needs to make just to break even. Thus, an account with a cost-equity ratio of 5% would need to earn 5% just to break even from all the costs of trading.

Gary Peterson was a registered representative and financial advisor of Ameriprise Financial Services from October 2009 to July 2012.  He worked at a branch office in Rockford, Illinois.  Peterson was also barred from the securities industry by FINRA in 2013.

Broker-dealers like Ameriprise Financial Services have a responsibility to adequately supervise all representatives who are registered through their firm, including investments sold by their registered representatives.  Broker-dealers also must take steps to ensure that their financial advisors follow all securities rules and regulations, such as to refrain from excessively trading a customer’s account.  When broker-dealers fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers.

Israels & Neuman PLC is a securities and investment fraud law firm with offices in Denver, Colorado and the Seattle area.  We represent investors in FINRA arbitration proceedings in all 50 states, including investors in the Rockford area.  Both of our attorneys are licensed to practice law in Illinois.  Our attorneys have represented over one thousand investors against many brokerage firms in the past, including Ameriprise Financial Services.

Click to view:  Peterson, Gary IL Order

Click to view:  Peterson BrokerCheck 9.16.16

HAVE YOU LOST MONEY WITH GARY W. PETERSON OR AMERIPRISE FINANCIAL?

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Israels & Neuman, PLC is a private law firm and is not affiliated with any government or law enforcement agency.  Any investigation referenced in this blog is independent in nature and is being conducted by our law firm privately, not in conjunction with any government or law enforcement agency.  All information contained in this blog should be deemed statements of opinion derived from the author’s review of public records, not statements of fact.  This blog is advertising material and does not create an attorney client relationship, nor does it constitute legal advice.  Everyone’s situation is different and the question of whether or not you have a claim will vary on a case-by-case basis.  In contingent representation, clients may still be liable for costs.