Winston Felix - Unsuitable Tax-Loss Trading Enforcement

WA DFI Securities Enforcement

Filed March 4th, 2026

Detected April 6th, 2026

Summary

The Washington State Department of Financial Institutions Division of Securities issued a Final Order against investment professional Winston Felix for recommending unsuitable tax-loss harvesting trades to a Washington customer in late 2022, resulting in over $120,000 in capital losses. The Division imposed penalties including a $10,000 fine, 90-day suspension, cease and desist order, and $3,281.25 in investigative costs. The order found Felix failed to gather information about the customer's capital gains position or existing loss carryforwards before executing the strategy.

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What changed

The WA DFI Securities Division entered Final Order S-24-3791-26-FO01 against Winston Felix for making unsuitable recommendations to a Washington customer at the end of 2022. Felix advised a series of tax-loss harvesting trades that generated over $120,000 in capital losses. The investigation found Felix failed to gather critical information about the customer's capital gains needing offset and whether previous capital losses could be carried forward before recommending the transactions. Penalties include cease and desist, 90-day suspension, $10,000 fine, and $3,281.25 in investigative costs under RCW 21.20.702, WAC 460-20C-220, and RCW 21.20.110.\n\nBroker-dealers and investment advisers should immediately review their tax-loss harvesting recommendation procedures to ensure compliance with suitability obligations. Representatives must document customer financial situations, including existing capital gains, losses, and carryforward positions before recommending trading strategies. The 90-day suspension and cease and desist order are now effective, and Felix retains the right to request judicial review.

What to do next

Review tax-loss harvesting recommendation procedures to ensure suitability obligations are met
Document customer capital gains positions, loss carryforwards, and financial situations before recommending trading strategies
Verify all broker-dealer representatives understand WA DFI suitability requirements under WAC 460-20C-220

Penalties

$10,000 fine, 90-day suspension, cease and desist order, $3,281.25 investigative costs

Source document (simplified)

Winston Felix – Final Order – S-24-3791-26-FO01

Case summary

On March 4, 2026, the Washington State Department of Financial Institutions Division of Securities entered a Final Order (S-24-3791-26-FO01) against Winston Felix.

Order details

Order File: S-24-3791-26-FO01

Laws & Rules: RCW 21.20.702, WAC 460-20C-220, RCW 21.20.110

Penalties/Remedies:

Cease and desist;
Suspension: 90 days;
Fines: $10,000;
Investigative Costs: $3,281.25

Findings

At the end of 2022, the Respondent made an unsuitable recommendation to a Washington customer to make a series of trades in their brokerage account for tax-loss harvesting purposes, causing over $120,000 in capital losses.
Prior to making the series of transactions, the Respondent failed to gather information about: (a) the amount of capital gains the Washington customer needed to offset; and (b) whether the Washington customer had previous capital losses that could be carried forward. The Respondent has the right to request judicial review of the Final Order.