Danny Strain Allegedly Churned Investments

Danny Strain (CRD# 437903[1]), a broker registered with Cape Securities, churned investments in a customer’s account, according to a recent investor dispute. MDF Law is investigating the Columbus, Georgia financial professional for allegations of similar conduct. Investors with concerns about their accounts should contact our law office as soon as possible. The information in this post is sourced from his BrokerCheck profile, a Financial Industry Regulatory Authority (FINRA) record accessed on October 13, 2023. 

Pending Dispute Seeks 6 Figures

On September 14, 2023, an investor lodged a dispute alleging that Mr. Strain misrepresented and omitted material information, recommended unsuitable variable annuity and real estate investments, engaged in churning, breached contract, and violated industry rules. The dispute, which remains pending, seeks $191,000 in alleged damages.

Past Dispute Alleged Danny Strain Made Unsuitable Recommendation

The pending September 2023 dispute is not the only one disclosed in Mr. Strain’s BrokerCheck profile. On April 3, 2023, another investor filed a dispute alleging that he recommended an unsuitable investment in ComputerShare. On August 30, 2023 his member firm settled the claim for $8,750.

What Is Churning?

In a podcast[2] released in 2020, FINRA’s then-deputy head of enforcement explained a form of broker misconduct known as churning. As he explained, churning is “a more egregious variation of excessive trading.” Unlike excessive trading, in which a broker performs a high volume of trades in order to generate commissions for themself, churning incorporates “either… an intent to defraud or…  reckless disregard for the customer’s interests.” Both churning and excessive trading, he made clear, are violations of securities industry laws and rules.

Understanding FINRA Rule 2020

Another common form of broker misconduct is the misrepresentation of material information[3]. This describes instances in which a broker provides inaccurate or incomplete disclosures regarding facts that would be a significant consideration for an investor considering a product. For example, a broker who represents a risky non-traded REIT as a conservative investment may be found liable for misrepresentation. In general, such conduct violates FINRA Rule 2020[4], which forbids brokers from using “any manipulative, deceptive or other fraudulent device or contrivance” to effect securities transactions. 

FINRA: Strain Based in Columbus, Georgia

Danny Strain launched his career as a broker when he registered with Pruco Securities Corporation in 1982. He stayed at that firm until 1987, when he departed for Equity Services’ office in Montpelier, Vermont. His history also includes tenures at firms like ProEquities, Aura Financial Services, and Resource Horizons Group. He has been registered with his current member firm, Cape Securities, since 2008, working out of its office in Columbus, Georgia. With 38 years of experience as a broker, he has completed two state securities law exams and three general industry/products exams.

Contact MDF Law

Do you have complaints regarding investments recommended by Danny Strain? You have rights as an investor, including the right to file a FINRA arbitration claim to pursue the recovery of losses. Call MDF Law at 800-767-8040 to receive a free consultation with one of our attorneys. We accept all cases on a contingency basis and provide free consultations nationwide. Don’t delay—call MDF Law today.