INVESTORS: Former SW Financial broker William Nicholas Athas is facing a pending customer dispute alleging unsuitable trading, common law fraud, churning, breach of contract, negligent supervision, and breach of fiduciary duty.
William Nicholas Athas (CRD: 3165470) was registered as a broker with SW Financial from 2020 until 2021. Previously, Athas was registered as a broker with Worden Capital Management from 2016 until 2020.
Athas has eleven disclosures on his BrokerCheck report. Two customer disputes filed against Athas were denied. One disclosure related to a personal financial matter of Mr. Athas.
January 2022 Regulatory Judgment
Initiated By: FINRA
Allegations: Athas was named a respondent in a FINRA complaint alleging that he willfully violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and violated FINRA Rule 2020 by churning customer accounts.
The complaint alleges that Athas controlled the trading in the customer accounts, the volume and frequency of trading in the accounts, decided what securities to buy and sell, the quantity of each transaction, and the timing of each transaction.
Athas also determined the commission he would charge for each transaction. The customers routinely followed Athas’ recommendations. Athas deliberately incurred unreasonably high trading costs in these customers’ accounts, which made it virtually impossible for the accounts to be profitable.
Athas persisted in his trading activity even after being warned about the excessive level of trading and high costs in these customer accounts on several occasions.
The complaint also alleges that Athas’ trading in these accounts was excessive and quantitatively unsuitable for each of the customers based on their investment profiles, as evidenced by the high turnover rates and cost-to-equity ratios, the frequency of the transactions, and the transaction costs incurred.
Athas’ churning and excessive trading caused the customers to pay approximately $1.6 million in commissions and other trading costs and to suffer approximately $1.1 million in losses. Conversely, Athas generated commissions of approximately $1.5 million for himself and his member firms.
The complaint further alleges that Athas recommended that the customers engage in short-term, in-and-out trading, often on margin, without having a reasonable basis to recommend that trading strategy to his customers. Athas’ recommended strategy therefore was not suitable.
Athas failed to perform reasonable diligence to understand the cumulative costs of his trading, including commissions, other trading costs, and margin interest. Athas also failed to perform reasonable diligence to understand the impact of these cumulative costs on the value of his customers’ accounts or the ability of his customers to earn a profit.
Athas also failed to understand turnover rates and cost-to-equity ratios, and therefore failed to calculate and consider these metrics when recommending and executing a short-term, in-and-out trading strategy in his customers’ accounts.
May 2020 Customer Dispute
Allegations: Unsuitable trading; common law fraud; churning; breach of contract; negligent supervision; breach of fiduciary duty. Dates of activity 5/2/2019 to 4/23/2020.
Damage Amount Requested: $84,932.35
January 2017 Customer Dispute
Allegations: Violations of Texas State Securities Act, Negligence and gross negligence, Breach of Contract, Breach of Fiduciary Duty, Misrepresentations and Omissions; and Violation of FINRA rules and industry standards of conduct regarding: Churning, Unauthorized Trading (unauthorized use of discretion) suitability, Know Your Customer Rules, Excessive trading, Unauthorized use of margin, Duty of good faith and fair dealing, Equitable principles of trade, use of Manipulative, Deceptive or Fraudulent Devices or contrivances. Dates of alleged activity was November 2014 through December 2015.
Damage Amount Requested: $290,000.00
Settlement Amount: $95,000.00
July 2011 Customer Dispute
Allegations: Churning and excessive trading.
Damage Amount Requested: $100,000.00
Settlement Amount: $10,000.00
July 2009 Customer Dispute
Allegations: Client claims churning, unsuitability, negligence, breach of contract, misrepresentation and omissions. Allegations are as a result of 11 stock trades effected between 8/28/06 and 10/22/07.
Damage Amount Requested: $84,000.00
Settlement Amount: $30,000.00
Broker Comment: Representative denies all allegations in the complaint.
December 2005 Customer Dispute
Allegations: Customer alleges unauthorized trades
Damage Amount Requested: $39,792.10
Settlement Amount: $40,000.00
August 2005 Customer Dispute
Allegations: Client alleges UAT; Alleges being charged margin interest on account.
Damage Amount Requested: $226,538.00
Settlement Amount: $906.61
January 2004 Customer Dispute
Allegations: Claimant alleges that during October – December 2003, unauthorized trades were executed in his account and that some commissions were excessive. No $$ figure cited.
Settlement Amount: $8,600.00
Contact Us Today
The Sonn Law Group is currently investigating allegations surrounding William Nicholas Athas. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.