Former Westpark Advisor Stephen Sloane Accused of Unsuitable Investment Strategy

According to a FINRA Department of Enforcement Default Decision on December 8, former Westpark Capital Advisor Stephen Sloane is reportedly barred from associating with any FINRA member firm in any capacity after allegedly recommending an unsuitable investment strategy to 14 customers and charging unfair prices to five customers. He is also reportedly ordered to pay $175,823.03 in restitution, plus interest, to seven customers, according to FINRA. 

The complaint alleged that Sloane recommended that the customers engage in active, short-term trading of U.S. Treasuries with 10 and 30-year maturities, without conducting reasonable diligence to understand the effect of the strategy’s costs on the customers’ potential returns, according to FINRA. 

Sloane apparently did not do any research or seek any guidance about whether the trading strategy could be profitable at the costs the customers paid. Sloane also allegedly made no attempt to calculate either the returns he expected to generate from active trading or whether those returns would break even with the cumulative costs of his trading strategy. 

He reportedly received approximately $220,000 in compensation from implementing his alleged strategy for the customers, representing his share of the $510,025 in markups and markdowns he purportedly charged to execute the trades for the customers. 

According to FINRA, after paying markups, markdowns, and other transactional service fees, the customers realized total trading losses, exclusive of interest, of $329,811, as a result of Sloane’s investment strategy. Although, Sloane’s member firm reportedly instructed him to reduce his trading costs, and then “fired him for disregarding its directive, Sloane moved to another member firm where he continued executing the same unsuitable strategy,” according to FINRA.

 The complaint also alleges that Sloane charged excessive and unfair markups. Sloane reportedly recommended that some customers use the proceeds from sales of treasury securities to purchase treasury securities the following day. The markups resulted in those customers’ trades on those days occurring at prices not reasonably related to prevailing market prices, FINRA said. 

According to his FINRA BrokerCheck report, Sloane was reportedly registered with Westpark Capital in New York, NY from 2016 until 2020. Prior to that he was affiliated with Morgan Stanley in New York, NY 2009  until 2016 when he was reportedly discharged for “Allegations concerning cost-related issues associated with registered representative’s trading of U.S. treasuries.” Sloane vehemently denied the allegations.  He reportedly has four customer complaints filed against him.

Filing a Complaint against your Brokerage Firm

Brokerage firms are required to adequately supervise their advisors. They must ensure they are complying with FINRA rules.

When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.

If you are concerned about investments with Stephen Sloane and Westpark Capital, the securities attorneys at The White Law Group may be able to help you. For a free consultation with an attorney, please call (888) 637-5510.

The foregoing information, which is all publicly available, is being provided by The White Law Group.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. For more information, please visit our website, www.whitesecuritieslaw.com.