Securities Regulation Daily Wrap Up, FINRA NEWS AND SPEECHES—FINRA expels member firm and bars two cofounders, (Jun 18, 2026)

By R. Jason Howard, J.D.

The firm and the individuals all accepted and consented to FINRA’s findings without admitting or denying them.

FINRA has announced that Reid & Rudiger LLC has been expelled from membership and two of its cofounders have been barred from association with any member firm for “churning and excessively trading customer accounts in violation of Regulation Best Interest (Reg BI) and FINRA rules.”

The FINRA press release explains that, separately, two of the firm’s supervisors were suspended for failing to identify and investigate ref flags related to the pervasive misconduct for three months in all principal capacities. They were also fined and are required to complete 20 hours of supervision-related continuing education.

FINRA determined that the firm and its cofounders excessively traded 20 accounts, “several of which were also churned over the course of six years with an intent to defraud or with reckless disregard for customers’ interests.” As a result of the fraud, customers incurred approximately $2 million in commissions and trading costs and approximately $2.7 million in losses.

According to FINRA, the misconduct was evident “through disproportionate commissions and trading costs that resulted in high cost-to-equity ratios, which represents the return on a customer’s investments that would have been needed to cover commissions and expenses” including:

• An account with an annualized cost-to-equity ratio of more than 111 percent, which means the account would have needed to generate returns of 111 percent just to break even;

• An account with an annualized cost-to-equity ratio of more than 69 percent and a resulting loss of more than $345,000; and

• An account with an annualized cost-to-equity ratio of more than 67 percent and a resulting loss of nearly $400,000.

As a result, FINRA found that the firm and its CEO failed to “establish and maintain a supervisory system reasonably designed to detect and act upon churning and excessive trading.” FINRA also found that the firm’s supervisors “failed to take reasonable steps to supervise the trading in the affected customers’ accounts, despite numerous red flags indicative of excessive trading and churning.”

The firm and the individuals all accepted and consented to FINRA’s findings without admitting or denying them.

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