Halil Kozi, Formerly of Windsor Street Capital, Faces FINRA Complaint for Alleged Churning and Excessive Trading

FINRA filed a complaint against Halil Kozi charging him with churning a customer’s account and excessively trading in that customer’s account while associated with PHX Financial, Inc.

The Sonn Law Group is investigating claims that former Windsor Street Captial broker Halil Kozi engaged in conduct in violation of FINRA Rules. Under FINRA Rules, brokerage firms are liable for their brokers’ misconduct or negligence and investors may be able to their investment through FINRA arbitration. Contact Sonn Law Group today or call us at 866–827–3202 for a free consultation.

According to the FINRA complaint, the allegations stem from Mr. Kozi’s interaction with Customer A ranging from the summer of 2013 through February of 2015 while Mr. Kozi was employed as a broker with PHX Financial, Inc. Customer A, a 45-year-old doctor who had no experience trading equities, bonds, or options and no experience short-term trading, had a “balanced growth” investment objective and a “moderate” risk tolerance. His net worth was $300,000, with an annual income of $400,000 to $499,999.

Mr. Kozi opened Customer A’s account at PHX before Customer A’s account paperwork had been fully completed and shortly after convinced Customer A to engage in options trading. Despite knowing Customer A had no experience with any kind of options trading, Mr. Kozi authorized Customer A’s account for “Level 3” options trading, which PHX’s procedures stated was only appropriate for experienced customers.

In the summer of 2013, Customer A deposited approximately $200,000 into his PHX account. From that time until early 2015, Mr. Kozi executed a total of 208 solicited transactions, 177 options trades, and 31 equity trades, with a principal value of over $3 million. Due to his insufficient understanding of options trading, Customer A was unable to make an independent evaluation of risks associated with the transactions and routinely followed Mr. Kozi’s recommendations. Mr. Kozi often told Customer A that he would miss out on large gains if he did not follow Mr. Kozi’s recommendations

In total, the trading in Customer A’s account generated more than $135,000 in gross comissions, over $87,000 in commissions to Mr. Kozi himself, while Customer A incurred losses totaling almost $72,000.

According to FINRA Rules, churning is fraudulent conduct that occurs when: (1) a registered representative controls a customer’s account; (2) the level of activity in the account is inconsistent with the customer’s investment objectives and financial situation; and (3) the registered representative acts with intent to defraud or with reckless disregard for the customer’s interests. In this case, Mr. Kozi exercised almost complete control over Customer A’s trading account due to Customer A’s lack of experience and understanding of the system. Mr. Kozi’s trading in Customer A’s account was excessive and unsuitable, as shown by the numerous transactions, the incompatibility with Customer A’s objectives and needs, and the overall losses suffered by the customer.

During the same period, Mr. Kozi allegedly made unsuitable recommendations to Customer A that were too speculative and too numerous when considered in the context of Customer A’s investment objective, risk tolerance, and financial situation and needs. Additionally, the complaint alleges that Mr. Kozi had no reasonable basis to believe that Customer A was aware of the risks associated with the options trading Kozi was recommending given Customer A’s lack of experience.

Jeffrey R. Sonn is an experienced investor losses attorney. If you suffered losses because a financial professional or corporate executive committed misconduct, Mr. Sonn will protect your rights and interests. Please do not hesitate to contact the Sonn Law Group today for a free review of your claim.