FINRA has expelled New York broker-dealer Reid & Rudiger LLC and permanently barred its cofounders, Clifford Reid and chief executive Edward Rudiger, Jr. The regulator found the firm churned and excessively traded customer accounts for nearly six years, generating roughly $2 million in commissions and leaving customers with approximately $2.7 million in losses. FINRA announced the sanctions after a 43-page settlement resolved a complaint filed in March 2026.
What FINRA found
FINRA determined that the firm and its cofounders excessively traded 20 customer accounts, several of which were also churned. Churning describes trading that generates commissions for the broker while serving no reasonable investment purpose for the customer. The conduct violated Regulation Best Interest and FINRA’s own rules.
Bill St. Louis, FINRA’s executive vice president and head of enforcement, said the action shows the regulator’s role protecting retail investors from misconduct. The trading produced significant customer losses over nearly six years, he noted, warranting the expulsion and permanent bars.
The sanctions in detail
| Party | Role | Sanction |
|---|---|---|
| Reid & Rudiger LLC | New York broker-dealer | Expelled from FINRA membership |
| Clifford Reid | Cofounder | Permanent bar from associating with any FINRA member |
| Edward Rudiger, Jr. | Cofounder and CEO | Permanent bar from associating with any FINRA member |
| Marc Harrison | Majority owner and supervisor | Three-month suspension in all principal capacities, $5,000 fine |
| Kelli Mezzatesta | Chief compliance officer | Three-month suspension in all principal capacities, $5,000 fine |
Harrison and Mezzatesta must also complete 20 hours of supervision-focused continuing education. All parties consented to FINRA’s findings without admitting or denying them.
How the numbers add up
| Scheme metric | Figure |
|---|---|
| Customer accounts excessively traded | 20 |
| Duration of the misconduct | Nearly six years |
| Commissions and trading costs | About $2 million |
| Customer losses | About $2.7 million |
| Underlying FINRA complaint | Filed March 2026 |
| Settlement document | 43-page settlement |
Churning drains accounts through constant turnover. Every round trip generates a commission while adding nothing to the investment case. Consider an account paying 4 percent per year in total trading costs. On a $500,000 balance, that is $20,000 annually in fees alone, before any market gain or loss.
Supervision failures FINRA cited
The settlement also details how the scheme survived so long. FINRA found Harrison and Mezzatesta failed to act on repeated red flags of excessive trading. They did not factor customers’ cost-to-equity ratios into their reviews and did not use the exception reports their systems made available.
The regulator held the firm and Rudiger, as chief executive, responsible for a supervisory system that could not detect churning. The three-month suspensions for the two supervisors run in all principal capacities.
What investors should do now
Excessive trading leaves a paper trail. Compare your account’s annual costs against its actual returns. A pattern of high turnover, steady commission charges, and little net gain is the classic signature of churning.
Investors who held accounts at Reid & Rudiger can request a complete trade history and cost breakdown from their statements. FINRA’s BrokerCheck tool shows whether a broker or firm carries prior disclosures.
How to recover your losses
Customers damaged by churning and excessive trading typically pursue claims through FINRA arbitration against the broker and the supervising firm. The expelled firm’s former customers should preserve all account statements, trade confirmations, and correspondence.
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This article is for informational purposes only and does not constitute legal advice.
