FINRA Files Disciplinary Complaint Involving Sutter Securities Inc. and Former Executive

The Financial Industry Regulatory Authority (FINRA), through its Department of Enforcement, recently filed a formal disciplinary complaint involving Sutter Securities Inc. (CRD No. 30770) and Keith Charles Moore (CRD No. 5191450). The complaint outlines allegations related to excessive trading, supervisory failures, and compliance deficiencies during a period spanning March 2020 through July 2021.

According to FINRA’s filing, the matter centers on trading activity conducted in two brokerage accounts belonging to an 89-year-old retired customer, identified in the complaint as “Customer 1.” FINRA alleges that during the relevant period, more than 2,200 trades were recommended and executed in the customer’s accounts, resulting in substantial commissions, high trading costs, and significant realized losses.

Allegations of Excessive Trading and High Costs

FINRA’s complaint alleges that the trading activity generated approximately $2.9 million in trading costs, including over $2.8 million in commissions, and produced annualized cost-to-equity ratios exceeding 38 percent, meaning the accounts would have needed to appreciate at unusually high rates simply to break even.

The Department of Enforcement further alleges that the trading activity was inconsistent with the customer’s stated investment objectives of long-term growth and a moderate risk tolerance, and that the accounts experienced frequent in-and-out trading as well as extensive use of margin.

Regulation Best Interest and Supervision Issues

The complaint also addresses conduct occurring after June 30, 2020, when Regulation Best Interest (Reg BI) became effective. FINRA alleges that certain trading activity during this period failed to meet Reg BI’s Care Obligation, which requires broker-dealers to act in the best interest of retail customers when making investment recommendations.

In addition, FINRA alleges that Sutter Securities and Mr. Moore, who served as the firm’s Chief Executive Officer and supervised the registered representative involved, failed to reasonably identify or respond to multiple red flags. These red flags allegedly included high turnover rates, substantial losses, elevated cost-to-equity ratios, and short-term trading patterns inconsistent with the customer’s profile.

Alleged Supervisory and Compliance Deficiencies

FINRA’s filing further alleges that Sutter Securities lacked written supervisory procedures reasonably designed to detect or prevent excessive trading and did not employ adequate surveillance tools or metrics. The complaint also describes alleged deficiencies in the firm’s supervision of electronic communications, including email review processes.

The disciplinary complaint seeks findings of violations and potential sanctions, including disgorgement and restitution, subject to the outcome of FINRA’s adjudicatory process. As with all enforcement actions, the allegations remain unproven unless and until FINRA prevails in the proceeding.

Why FINRA Complaints Matter to Investors

FINRA enforcement complaints can provide insight into how regulators evaluate brokerage practices, supervision, and compliance with investor protection rules. Investors who review such filings may gain a better understanding of regulatory expectations, particularly regarding excessive trading, supervision responsibilities, and Regulation Best Interest obligations. As always, each investor’s situation is unique, and regulatory filings are fact-specific. Reading FINRA complaints can be an important step in becoming informed about how investment accounts are monitored and regulated within the securities industry.