Michael May Suspended by FINRA For Allegedly Executing Excessive Trades
Michael May (CRD #: 4712287), a broker registered with VCS Venture Securities, was suspended by FINRA, according to his BrokerCheck record, accessed on December 28, 2021.
Broker Suspension
According to an Acceptance, Waiver, and Consent agreement dated November 5, 2021, Michael May consented to the findings that between June 2017 and May 2018 he executed excessive trades in one investor’s account, in violation of FINRA Rules 2111 and 2010.
Michael May allegedly recommended that Customer 1 place 21 trades in his account. Although Customer 1’s account had an average month-end equity of approximately $25,331, Michael May recommended trades with a total principal value of more than $265,044, which resulted in an annualized turnover rate of more than 10. Collectively, the trades that Michael May recommended caused Customer 1 to pay $10,349 in commissions, trading costs, and margin interest, which resulted in an annualized cost-to-equity ratio of over 40%.
For context, FINRA has stated that a turnover rate of six or more and an annualized cost-to-equity ratio above 20% indicates excessive trading.
Sanctions
As part of the AWC, Michael May consented to the following sanctions.
- A three-month suspension from associating with any FINRA member in all capacities.
- A $5,000 fine
- Restitution of $10,349
You can read the full copy of the AWC here.
What is Excessive Trading?
Churning is another term for excessive trading, which occurs when brokers execute trades simply for the sake of generating commissions for themselves, without any financial benefit for their investors. It is prohibited under FINRA Rule 2111, under “quantitative suitability.” Quantitative suitability means the number of trades must fit the investor’s needs.
Michael May’s alleged trading of the account resulted in high turnover rates and cost-to-equity ratios.
- The turnover rate represents the number of times that a portfolio of securities is exchanged for another portfolio of securities.
- The cost-to-equity ratio measures the amount an account has to appreciate just to cover the commissions and other expenses.
Background Information
Michael May has passed the following exams:
- Series 66 – Uniform Combined State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
He is a registered broker in 33 states.
Michael May has also worked with the following firms:
- Joseph Stone Capital (CRD#:159744)
- Cape Securities (CRD#:7072)
- Liberty Partners Financial Services (CRD#:130390)
- America’s Choice Equities (CRD#:135272)
- J.P. Turner & Company (CRD#:43177)
- LH Ross & Company (CRD#:37920)
- Continental Broker-Dealer Corp (CRD#:14048)
Kurta Law Can Help
If you have been victimized after working with Michael May, don’t hesitate to contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.
For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.