NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

Steven Krasner aka Steven Zarkhin
AWC/2009019995901

Krasner made unsuitable recommendations to a customer who was a retiree and inexperienced investor. 

Although the customer agreed to each of Krasner’s recommendations, Krasner employed a trading strategy that was not suitable for the customer’s particular financial situation. The customer had indicated in account opening documents that he had an investment objective of capital preservation and a low risk tolerance. 

Krasner recommended the use of margin to execute trades in the customer’s account and at times exposed the customer to inappropriate financial risk. Krasner never read the customer’s account opening documents, though they were available to him, and was unaware of the customer’s financial situation and risk tolerance, as stated in the account opening documents.

Krasner’s member firm’s database and computer platform that he used to place trades, as well as the account statements that were mailed to the customer each month, inaccurately indicated that the investment objective was speculation.  In his conversations with the customer, Krasner never confirmed the accuracy of the investment objective. Krasner employed a short-term and speculative trading strategy of short selling stock and using margin. Since Krasner was not fully aware of the customer’s stated financial condition, he based his recommendations on the erroneous view that the customer could absorb the high risks of these transactions. 

The customer frequently spoke with Krasner on the phone, gave Krasner express permission to execute the recommended trades and informed Krasner that he was willing to engage in some speculation. Furthermore, Krasner based his recommendations on his conversations with the customer and the firm’s inaccurate database, not the accurate financial information that was contained in the account opening documents. 

Krasner executed solicited trades in the customer’s account, while charging the account $51,790 in commissions and fees. Although several of the individual trades were profitable, including commissions, the customer’s account lost $54,160 in net value, dropping from a net equity value of $162,571 to $108,410.

Steven Krasner aka Steven Zarkhin : Fiend $10,000; Ordered to disgorge to a customer $18,126.81 (payable as partial restitution); Suspended 2 months

Tags: Suitability  Margin