The US Financial Industry Regulatory Authority (FINRA) has formally closed the book on New York broker-dealer Reid & Rudiger LLC, expelling a firm that was already on its way out of the industry. FINRA expelled the firm from membership and barred its cofounders, Clifford Reid and chief executive Edward Rudiger Jr, from associating with any member firm, after finding they churned and excessively traded customer accounts in breach of Regulation Best Interest (Reg BI) and FINRA rules.
The firm had been winding down for some time. It filed a broker-dealer withdrawal request at the end of April, and FINRA cancelled its registration in early June after it failed to pay industry fees. The expulsion, settled this month, formalises that exit and attaches permanent bars to the two men who ran the business.
According to FINRA, the firm and its cofounders excessively traded 20 customer accounts, several of which were also churned, over a period of nearly six years. The conduct cost clients around $2 million in commissions and trading costs and produced approximately $2.7 million in losses. The firm’s business centred on a high-volume, high-cost market-timing strategy marketed largely to high-net-worth investors reached through cold calling, an approach FINRA said made it “virtually impossible for customers to make a profit”.
The harm showed up clearly in the firm’s trading metrics. FINRA recorded annualised turnover rates ranging from 6.92 to 17.33 and annualised cost-to-equity ratios of between 34.9% and 111%. At the top of that range, one account would have needed to generate a 111% return simply to cover commissions and costs and break even. Two further accounts carried cost-to-equity ratios of around 69% and 67%, with losses of more than $345,000 and nearly $400,000 respectively.
FINRA also took action against the firm’s supervisors. Majority owner Marc Harrison and chief compliance officer Kelli Mezzatesta were each suspended for three months in all principal capacities, fined $5,000 and required to complete 20 hours of supervision-related continuing education. FINRA found they failed to act on repeated red flags of excessive trading, did not factor customers’ cost-to-equity ratios into their supervision, and did not use the exception reports available to them. The firm and Rudiger, as CEO, were found to have failed to maintain a supervisory system capable of detecting and acting on churning.
Reid & Rudiger operated from 40 Wall Street and had been in business since 1999. The matter was resolved through a 43-page settlement, with the firm, Reid, Rudiger, Harrison and Mezzatesta consenting to FINRA’s findings without admitting or denying them. FINRA’s underlying complaint was filed in March 2026.
FINRA framed cost-to-equity ratios and turnover rates as key metrics for identifying excessive trading and churning, a reminder to member firms that supervision systems are expected to monitor and act on those figures rather than treat them as background data.
