James Flower: Ex-NYC Rep Barred over VXX ETN Trades

Ex-Spartan Capital Securities stockbroker James Flower (CRD# 2817701) has been barred from acting as a broker or otherwise associating with any broker-dealer firm. Previously based in Garden City, New York, he was found by the Financial Industry Regulatory Authority to have churned and excessively traded in customer accounts.

According to a Letter of Acceptance, Waiver and Consent (No. 2014040644001) issued in April 2017, James Flower was registered with Global Arena Capital Corporation when, between 2013 and 2014, he unsuitably recommended thirteen customers invest in the iPath S&P 500 VIX Short Term Futures exchange-traded note. FINRA’s findings state that when he recommended the investment, known as VXX, to his customers, he “incorrectly believed that it traded inverse to the S&P 500 index.” As a result of this misperception, FINRA found, he recommended the clients “purchase and hold the VXX as a hedge to an anticipated overall market decline.” The customers in question “made 58 purchases and 399 sales” of shares of the ETN during the period in question, FINRA states, sustaining losses of more than $249,000. 

The AWC Letter concludes that Mr. Flower did not have an adequate understanding of the VXX ETN upon which he could form a reasonable basis to recommend it to the 13 customers in question. As such, FINRA found, he violated FINRA Rule 2111 and FINRA Rule 2010. FINRA suspended him from associating with any member firm for three months. 

Later, in May 2021, a FINRA panel issued a decision stemming from a FINRA complaint alleging unauthorized and excessive trading. The panel found he engaged in excessive and unsuitable trading, executed unauthorized trades, and mis-marked solicited transactions as unsolicited. As a result of these findings, FINRA barred Mr. Flower from associating with any FINRA member in any capacity. It also ordered him to pay more than $250,000 in restitution and other monetary penalties. 

According to the Financial Industry Regulatory Authority, James Flower holds 23 years of securities industry experience. His previous member firms include Spartan Capital Securities, SW Financial, Laidlaw & Company, Global Arena Capital Corporation, Prestige Financial Center, Brookstone Securities, Obsidian Financial Group, Westrock Advisors, JP Turner & Company, Granite Associate, Continental Broker-Dealer Corporation, Whitehall Wellington Investments, Tasin & Company, Duke & Company, and Gaines Berland. His credentials include the passage of three securities industry qualifying examinations: the Uniform Securities Agent State Law Examination, or Series 63; the Securities Industry Essentials Examination, or SIE; and the General Securities Representative Examination, or Series 7. He presently holds no state licenses. (Information accessed on January 7, 2022.)

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