FINRA Expels Reid & Rudiger Over Churning and Reg BI Violations

FINRA expelled Reid & Rudiger LLC from membership on 17 June and barred cofounders Clifford Reid and Edward Rudiger, Jr. from association with any member firm. The regulator said the firm and the two representatives violated Regulation Best Interest and FINRA rules through churning and excessive trading in customer accounts.

FINRA also suspended two supervisors, Marc Harrison and Kelli Mezzatesta, in all principal capacities for three months, fined each $5,000 and required supervision-related continuing education. The regulator said they failed to identify and investigate red flags tied to the trading activity.

According to FINRA, the misconduct affected 20 accounts over about six years and caused customers to incur approximately $2 million in commissions and trading costs and about $2.7 million in losses. FINRA said some accounts had annualized cost-to-equity ratios above 67%, 69% and 111%, meaning customers needed very large returns just to break even after costs.

Why it matters

For traders and investors, the case is a direct reminder that trading frequency and account costs can become a suitability and best-interest issue, not just a performance problem. High turnover, large commissions and weak supervision remain core red flags when evaluating a broker or representative.

What to watch next

Watch FINRA’s monthly disciplinary summaries for related supervisory cases and use BrokerCheck before opening or maintaining accounts with individual representatives or smaller broker-dealers.