Terrance Reagan Charged by SEC over Excessive Commissions

The Securities and Exchange Commission charged former brokers Terrance Reagan (CRD #2672751[1]) & Nate Clay (CRD #4525541[2]) with violating the Securities and Exchange Act.  The case against Reagan and Clay was filed by the Securities and Exchange Commission in the Southern District of New York.  The Case Number is 1:23-cv-00276.

SEC v. Terrance Reagan & Nate Clay

The SEC’s complaint alleges that from December 2015 to December 2018, Terrance Reagan and Nate Clay recommended investments that involved frequent buying and selling of securities without a reasonable basis to believe their recommendations were suitable. The frequent trading generated significant profits for Clay and Reagan, who were both associated with a broker-dealer named Laidlaw & Company at the time. The SEC’s complaint further alleges that Reagan engaged in this conduct at Arive Capital Markets, a different broker-dealer, from March 2020 to April 2021.

Copy of the Complaint

Understanding FINRA’s Rules Against Churning

FINRA Rule 2111, also known as the “Churning Rule,” is a regulation created by the Financial Industry Regulatory Authority (FINRA) that prohibits brokers from excessively trading a client’s account in order to generate commissions or other fees for the broker.

Churning occurs when a broker engages in excessive trading activity in a client’s account, typically to generate more commissions for themselves, without regard for the client’s investment objectives or interests. This type of behavior can result in significant costs for the client, including trading fees, taxes, and potential losses from poor investment decisions.

FINRA Rule 2111 requires that brokers have a reasonable basis to believe that the recommended transactions are suitable for the client and that the frequency and costs of the transactions are not excessive. The rule also requires that brokers consider the client’s investment objectives, risk tolerance, and financial situation when making investment recommendations.

If a broker engages in churning, they may be subject to disciplinary action by FINRA, including fines, suspension or revocation of their license, and other penalties. Clients who believe they have been the victim of churning may also be able to take legal action against the broker to recover any losses or damages they have suffered.

Did You Lose Money Investing with Terrance Reagan or Nate Clay?

If you lost money investing with Terrance Reagan, Nate Clay, Laidlaw & Company or Arive Capital Markets, please contact us at 800-767-8040 for a free and confidential consultation.