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Sean McCabe Suspended by FINRA for Alleged Excessive Trading

Sean McCabe (CRD #: 5479643), a broker formerly registered with Network 1 Financial Securities, has been suspended by FINRA, according to his BrokerCheck record, accessed on January 16, 2025. Keep reading if you want to know more about his alleged conduct as a broker.

FINRA Suspension

On December 11, 2024, Sean McCabe consented to the entry of findings that he allegedly excessively traded in a client’s account between September 2015 and October 2019.

According to a Letter of Acceptance, Waiver & Consent (AWC), the client was allegedly in his late fifties and had a speculative risk tolerance. Sean McCabe allegedly recommended high frequency in-and-out trading.

In January 2016, he allegedly recommended the purchase of more than $30,000 of stock in an international consumer technology company. He allegedly recommended the sale of that position only eight days later, by which time the stock price had marginally increased. This sale allegedly resulted in a loss due to commission fees.

During the relevant period, Sean McCabe allegedly recommended 86 transactions that resulted in the following:

  • Annualized turnover of 8
  • Annualized cost-to-equity ratio of approximately 36%
  • $19,275 in commissions
  • $57,445 in realized losses

When evaluating potentially excessive trading, turnover rates over 6 and cost-to-equity ratios above 20% are considered red flags.

The AWC concluded that these allegations constitute violations of FINRA Rules 2111 and 2010.

FINRA Rule 2111

FINRA Rule 2111 requires brokers to recommend securities that adequately fit an investor’s financial goals. Brokers must take into account an investor’s tax status, risk tolerance, investing experience, and other information described in their profile.

Investors who rely on their broker for recommendations may be able to recoup their losses through FINRA arbitration.

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.

Sanctions

Sean McCabe consented to the following sanctions:

  • Three-month suspension from associating with FINRA members
  • $5,000 fine
  • Restitution of $19,275 plus interest

His suspension began on January 6, 2025, and will end on April 5, 2025. You can read the AWC here.

Investor Disputes

On March 7, 2016, an investor alleged that Sean McCabe engaged in negligent conduct, including negligent misrepresentation. The dispute sought $550,000 in damages and was settled for $210,000.

On June 23, 2015, an investor filed a dispute alleging that Sean McCabe executed unauthorized and excessive trades, made misrepresentations, and acted negligently. The client sought $250,144.22 and received a settlement of $65,000.

FINRA Rule 2020

FINRA Rule 2020 prohibits the use of deceptive, manipulative, and otherwise fraudulent methods to influence the purchase and sale of securities. This includes the misrepresentation or omission of material facts relating to investments.

FINRA Rule 3260

Unauthorized trading violates FINRA Rule 3260, which limits brokers to exercising their trading discretion in pre-approved discretionary accounts.

What is broker negligence?

Many types of broker misconduct may qualify as negligence. Typical examples include recommendations of unsuitable investments, misrepresentations or omissions of material fact, and failure to supervise.

Investors who believe their losses are the result of broker negligence may be able to recover their funds through FINRA arbitration.

Sean McCabe Background Information

Sean McCabe has passed the following exams:

  • Series 63 Uniform Securities Agent State Law Examination
  • SIE – Securities Industry Essentials Examination
  • Series 7 General Securities Representative Examination

He is a registered broker in 34 states.

Sean McCabe has worked for the following firms:

  • Network 1 Financial Securities (CRD #: 13577)
  • Worden Capital Management (CRD #: 148366)
  • Four Points Capital Partners (CRD #: 43149)
  • National Securities Corporation (CRD #: 7569)
  • Woodstock Financial Group (CRD #: 38095)

Kurta Law Can Help

If you worked with Sean McCabe and you have concerns about your investments, please 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 that 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.